Frisbee Hardware uses a perpetual inventory system. At year-end, the Inventory account has abalance of $250,000, but a physical count shows that the merchandise on hand has a cost of only$246,000.a. Explain the probable reason(s) for this discrepancy.b. Prepare the journal entry required in this situation.c. Indicate all the accounting records to which your journal entry in part b should be posted.

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Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is