Gala Costumes estimates its inventory by the gross profit method. The gross profit has averaged 28% of net sales. The company’s inventory records reveal the following data (amounts in thousands):

Requirements
1. Estimate the December 31 inventory, using the gross profit method.
2. Prepare the December income statement through gross profit for Gala Costumes.

Transcribed Image Text:

Inventory, December 1 Transactions during December: Purchases....... $ 295 7,639 Purchase discounts. 177 Purchase returns.............. 39 Sales 8,623 Sales returns.. 21