Marc Price Co. uses the gross profit method to estimateinventory for monthly reporting purposes. Presented below isinformation for themon of May.

Inventory, May1 160,000

Purchases(gross) 640,000

Freight-in 30,000

Sales 1,000,000

Salesreturns 70,000

Purchasediscounts 12,000

a. compute the estimated inventory at May 31, assuming thatthe gross profit is 30% of sales.

b. compute the estimated inventory at May 31, assuming thatthe gross profit is 30% of cost.