Olympic Village Enterprises lost its entire inventory in a hurricane that occurred on July 31, 2014. 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 July:

Beginning Inventory .......$37,100

Net Purchases .........294,600

Sales ............540,100

Sales Returns and Allowances .. 72,200

Sales Discounts ........ 8,300

Requirements

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

2. Prepare the July income statement through gross profit for Olympic Village Enterprises.