Assume that Burger King estimates its inventory by the gross margin method when preparing monthly financial statements. For the past two years, gross margin has averaged 25 percent of net sales. Assume further that the company's inventory records for stores in the southeastern region reveal the following data:

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1. Estimate the March 31 inventory using the gross margin method.
2. Prepare the March income statement through gross margin for the Burger King stores in the southeastern region. Use the multiple-step format.

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Inventory, March 1 Transactions during March: Purchases.......... Purchase discounts. Purchase returns. Sales....... Sales returns. $ 392,000 6,585,000 149,000 8,000 8,657,000 17,000