Novak 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$ 163,800

Purchases (gross)

651,200

Freight-in

29,500

Sales revenue

925,900

Sales returns

66,700

Purchase discounts

11,300

Compute the estimated inventory at May 31, assuming that the gross profit is 25% of net sales.

Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost