Estimating Inventory Using Gross Profit Method Assume that we are auditing the records of Forde Corporation. A physical inventory has been taken by the company under our observation. However, the valuation extensions have not been completed. The records of the company show the following account data. The gross margin last period was 35% of net sales; we anticipate that it will be 25% for the year under audit. Sales, gross Sales returns (returned to inventory) Purchases, gross $2,520,000 Beginning inventory 40,000 Freight-in 1,240,000 Purchase returns and allowances $800,000 56,000 16,000 Estimate the cost of ending inventory using the gross profit method. $