Estimating ending inventory (Learning Objective 7) 15–20 min.

Inland Empire Supply, Inc., lost its entire inventory in a hurricane that occurred on July 31, 2014. Over the past five years, gross profit has averaged 39% of net sales. The company’s records reveal the following data for the month of July:

$ 43,400 287,300 488,400 81,500 5,900 Beginning Inventory............................................................................................

Net Purchases.....................................................................................................

Sales ...................................................................................................................

Sales Returns and Allowances ............................................................................

Sales Discounts ..................................................................................................

Requirements 1. Estimate the July 31 inventory using the gross profit method.

2. Prepare the July income statement through gross profit for Inland Empire Supply, Inc.

AppendixLO1