Show your calculations fully for estimating $($a$)-$closing inventory

and $($b$)-$ Preparation of the Income statement. $($MARKS:$6)$

The Sutton Hardware Store takes inventory only at the end of the calendar

year because of the inconvenience involved. The gross profit of the business

is stable and averages $40\%$ of sales. On January $31,$ at the end of the first

month of business, the ledger included the following five account balances:

Use the above information to estimate the closing inventory. Then,

prepare a condensed income statement for the month of January.The Sutton Hardware Store takes inventory only at the end of the calendar year because of the inconvenience involved. The gross profit of the business is stable and averages $40\%$ of sales. On January $31,$ at the end of the first month of business, the ledger included the following five account balances:

Merchandise Inventory

$ $51920$

Sales

$103850$

Purchases

$73950$

Freight$-$in

$1258$

Operating Expenses

$22357$

Use the above information to estimate the closing inventory. Then, prepare a condensed income statement for the month of January.