Financial & Managerial Accounting 3rd Edition by Charles Horngren,Harrison, Walter,Suzanne Oliver

Exercise 57

Estimating ending inventory by the gross profit method and preparing the income statement
Halloween Costumes estimates its inventory by the gross profit method. The gross profit has averaged 30% of net sales. The company's inventory records reveal the following data:

Requirements
1. Estimate the May 31 inventory, using the gross profit method.
2. Prepare the May income statement through gross profit for Halloween Costumes.