Astaire 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 $204,000 Purchases (gross) 819,200 Freight-in 38,900 Sales 1,280,000 Sales returns 89,600 Purchase discounts 15,360 (a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales. (b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.
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