$4.(4$ points$)$ Hornacek Company uses the gross profit method to estimate inventory for monthly

reporting purposes. Presented below is information for the month of May.

Inventory, May $1$ $ $120,000$

Purchases $($gross$)770,000$

Freight$-$in $20,000$

Sales revenue $1,200,000$

Sales returns $100,000$

Purchase discounts $50,000$

Instructions

Compute the estimated inventory at May $31,$ assuming that the gross profit is $33\%$ of sales.