2. Mountain Mabels is a small general store located just outside of Yellowstone National Park. The store uses a periodic inventory system. Every January 1, Mabel and her husband close the store and take a complete physical inventory while watching the Rose Bowl Parade on television. The inventory balance on January 1 of the prior year was $6,240, and the inventory balance on December 31 was $4,560. Sales were $150,000 during the prior year, and purchases were $74,400.

a. Compute the cost of goods sold for the prior year.

When Mary Potts arrived at her store on the morning of January 29, she found empty shelves and display racks; thieves had broken in during the night and stolen the entire inventory. Accounting records showed that Potts had inventory costing $55,000 on January 1. From January 1 to January 28, Potts had made net sales of $77,000 and net purchases of $88,000. The gross profit during the past several years had consistently averaged 41 percent of net sales. Potts plans to file an insurance claim for the theft loss. a. Using the gross profit method, estimate the cost of inventory at the time of the theft. Estimated ending inventory