Fessler Enterprises, Inc., lost its entire inventory in a hurricane that occurred on May 31, 2016. Over the past five years, gross profit has averaged 39 percent of net sales. The company's records reveal the following data for the month of May:

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

Net Purchases ................................................. 365,100

Sales ........................................................... 597,100

Sales Returns and Allowances .................................. 12,300

Sales Discounts ................................................... 9,100

Requirements

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

2. Prepare the May income statement through gross profit for Fessler Enterprises, Inc?