Ernst Equipment Co. wants to prepare interim financial statements for the first quarter. The company
Wishes to avoid making a physical count of inventory. Ernst’s gross profit rate averages 30%. The
Following information for the first quarter is available from its records:

January 1 beginning inventory.. . $ 752,880
Cost of goods purchased.. . 2,159,630
Sales.. . 3,710,250
Sales returns.. . 74,200

Use the gross profit method to estimate the company’s first quarter ending inventory.