Henderson Company uses the gross profit method to estimate ending inventory and cost ofgoods sold when preparing monthly financial statements required by its bank. Inventory onhand at the end of July was $122,500. The following information for the month of Augustwas available from company records:

Purchases:$224,000

Freight-in:$5,700

Sales:$355,000

Sales Returns:$9,500

Purchase Returns:$4,800

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