Problem 6-13A Sweeney Stores estimates its inventory by the gross margin method when preparing monthly financial statements (Sweeney Stores uses the periodic method otherwise). For the past two years, gross margin has averaged 45 percent of net sales. The business's inventory records for its stores reveal the following data.

Inventory: July 1, 2017. $240,000 Purchases. 7,890,000 Purchases return. 230,000 Sales. 11,250,000 Sales returns. 1,25,000

Reauired 1. Estimate the July 31, 2017, inventory using the gross margin method

2. Prepare the July 2017 income statement through gross margin for Sweeney Stores.