Estimating Inventory Using Gross Profit Method

Assume that we are auditing the records of Forde Corporation. A physical inventory has been taken by the company under our observation. However, the valuation extensions have not been completed. The records of the company show the following account data. The gross margin last period was 35% of net sales; we anticipate that it will be 25% for the year under audit.

Sales, gross	$1,386,000		Beginning inventory	$440,000
Sales returns (returned to inventory)	22,000		Freight-in	30,800
Purchases, gross	682,000		Purchase returns and allowances	8,800

Estimate the cost of ending inventory using the gross profit method. $???