Inland Empire Supply, Inc., lost its entire inventory in a hurricane that occurred on
July 31, 2012. Over the past five years, gross profit has averaged 39% of net sales.
The company’s records reveal the following data for the month of July:
Beginning Inventory......................................................................................... $ 43,400
Net Purchases..................................................................................................... 287,300
Sales................................................................................................................... 488,400
Sales Returns and Allowances............................................................................ 81,500
Sales Discounts .................................................................................................. 5,900

Requirements
1. Estimate the July 31 inventory using the gross profit method.
2. Prepare the July income statement through gross profit for Inland Empire Supply, Inc.