Amtran Enterprises lost its entire inventory in a hurricane that occurred on October 31, 2012. Over the past five years, gross profit has averaged 30% of net sales. The company’s records reveal the following data for the month of October:

Beginning Inventory........................................................................................ $ 36,500

Net Purchases..................................................................................................... 370,200

Sales................................................................................................................... 555,500

Sales Returns and Allowances............................................................................ 60,700

Sales Discounts .................................................................................................. 2,600

Requirements

1. Estimate the October 31 inventory, using the gross profit method.

2. Prepare the October income statement through gross profit for Amtran Enterprises.