Kingbird 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 $ 156,000
Purchases (gross) 576,100
Freight-in 29,300
Sales revenue 998,400
Sales returns 72,100
Purchase discounts 11,900
1) Compute the estimated inventory at May 31, assuming that the gross profit is 35% of net sales.
2) Compute the estimated inventory at May 31, assuming that the gross profit is 35% of cost. (Round percentage of sales to 2 decimal places, e.g. 78.74% and final answer to 0 decimal places, e.g. 6,225.)