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 $ 110,000 Purchases (gross) 720,000 Freight-in 32,000 Sales revenue 1,050,000 Sales returns 70,000 Purchase discounts 18,000 Instructions (a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales. (b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost