Assume Young Company, a music store, lost some inventory in a fire on March 15. To file an insurance claim, Young Company must estimate its March 15 inventory by the gross profit method. Assume that for the past two years, Young Company’s gross profit has averaged 44% of net sales. Suppose Young Company’s inventory records reveal the following data:
Inventory, March 1 ..................... $ 57,300
Transactions during March:
Purchases ................................... 490,700
Purchase discounts ...................... 17,000
Purchase returns........................... 70,000
Sales .......................................... 660,000
Sales returns ................................ 13,000

Requirements
1. Estimate the cost of the lost inventory using the gross profit method.
2. Prepare the March income statement for this product through gross profit. Show the detailed computation of cost of goods sold in a separate schedule.