Question - Henderson Company uses the gross profit method to estimate ending inventory and cost of goods sold when preparing monthly financial statements required by its bank. Inventory on hand at the end of July was $122,500. The following information for the month of August was available from company records:
Purchases: $219,000
Freight-in: $5,200
Sales: $350,000
Sales Returns: $9,000
Purchase Returns: $4,300
In addition, the controller is aware of $10,000 of inventory that was stolen during August from one of the company's warehouses. Calculate the estimated inventory at the end of August, assuming a markup on cost of 25%.