Gallinger Enterprises, Inc., lost its entire inventory in a hurricane that occurred on May 31, 2018. Over the past five years, gross profit has averaged 38 percent of net sales. The company’s records reveal the following data for the month of May:

Beginning Inventory.........................................................................................$ 38,212
Net Purchases....................................................................................................364,735
Net Sales.............................................................................................................576,300

Requirements

1. Estimate the May 31 inventory, using the gross profit method.

2. Prepare the May income statement through gross profit for Gallinger Enterprises, Inc.