Whitewater Co. lost its entire inventory in a flash flood that occurred on August 31, 20##. Over the past 4 years gross profit has averaged 32% of net sales. The following records for August were recovered:
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Beginning Inventory
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$38,600
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|
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Net Purchases
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$341,900
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|
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Sales
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$530,400
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|
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Sales returns and allownaces
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$12,300
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|
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Sales discounts
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$6,500
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Requirements:
1. Estimate the August 31 inventory using the gross profit method.
2. Prepare the August income statement through gross profit for Whitewater Co.