Exercise 9-14

Indigo 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 $ 174,600 Purchases (gross) 607,000 Freight-in 29,300 Sales revenue 983,300 Sales returns 67,700 Purchase discounts 12,700

Compute the estimated inventory at May 31, assuming that the gross profit is 20% of net sales.

The estimated inventory at May 31 $

Compute the estimated inventory at May 31, assuming that the gross profit is 20% of cost. (Round percentage of sales to 2 decimal places, e.g. 78.74% and final answer to 0 decimal places, e.g. 6,225.)

The estimated inventory at May 31 $