Question: Ernst Equipment Co. wants to prepare interim financial statements for the first quarter. The company wishes to avoid making a physical count of inventory. Ernst's gross profit rate averages 30%. The following information for the first quarter is available from its records.
January 1 beginning inventory . . . . . . . . . $ 752,880
Cost of goods purchased . . . . . . . . . . . . 2,159,630
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,710,250
Sales returns . . . . . . . . . . . . . . . . . . . . . . 74,200
Required Use the gross profit method to estimate the company's first quarter ending inventory.