[alex567]

I confused about how to do this problem.

Merchandis inventory Jan 1 800,000
Purchases during year 650,000
Purchases return and allowances 24,400
Purchases discounts 13,600
sales for the year 1,044,000
sales returns and allownaces 28,400
sales discounts 14,200
estimated gross profits 38%

1. estimate the value of the ending inventory using the gross profit method
2. prepare an income statement for the year ending December 31,20xx
operating expenses are 294,400

[Renaissance1967]

(Beg Inv + Purchases - Returns - Discounts) - ((sales - returns - discounts) / 1.38) = end inv