n IX: Continuing with just the FIFO method information from the previous problem, the FIFO frthod cost of goods sold and ending inventory amounts are determined to be $44,700 and $6,300, respectively. In a perfect world, a physical count of the ending inventory should show 300 units (2.500 units available less the 2.200 units sold) on hand at a total cost of $6,300. However, in the real world, accounting errors as well as inventory theft or misappropriation often occurs. this reason, companies are required to take a physical inventory count of their inventory and determine its cost using their chosen method. The inventory account balance is adjusted to agree to its physical count since the physical count is more verifiable. For Assume the company uses the FIFO method, and at the end of the year, a physical count shows inventory costing $6,000 is still on hand A. What journal entry should the company make to adjust its inventory account to agree to the phy sical count? DebitCredit 12/31/X4 B. After the above journal entry is posted to the general ledger, what are the new cost of goods sold and ending inventory balances at the end of the year? How will the new cost of goods balance affect the company's net income for the year? Account balances Account balances before the adjustment after the adjustment Cost of Goods Sold $44,700 Ending Inventory S 6,300 C. Assume a mistake occurred during the physical count process which caused the inventory count to be understated (too low) by $300. What can we conclude about how this error affects the financial statements in the current year? What about in the subsequent year? Current year effect: Subsequent year effect