Question - Extravaganza Costumes estimates its inventory by the gross profit method. The gross profit has averaged 29% of net sales.
The company's inventory records reveals the following data (amounts in thousands)
Inventory, March 1 $293
Transaction during March:
Purchases 7767
Purchases discounts 167
Purchases returns 27
Sales 8642
Sales returns 32
Requirement 1 - Estimate the March 31 inventory, using the gross profit.
Requirement 2 - Prepare the March income statement through gross profit for Extravaganza Costumes.