Estimating ending inventory by the gross profit method and preparing the income statementK...

Estimating ending inventory by the gross profit method and preparing the income statement

Kids Costumes estimates its inventory by the gross profit method. The gross profit has averaged 39% of net sales. The company’s inventory records reveal the following data:

Requirements

1. Estimate the July 31 inventory using the gross profit method.

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2. Prepare the July income statement through gross profit for Kids Costumes.