Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May. Flint Inventory, May 1 Purchases (gross) Freight-in 2 Sales revenue Sales returns Purchase discounts (a) $ 174,600 607,000 29,300 983.300 67,700 12,700 Compute the estimated inventory at May 31, assuming that the gross profit is 25% of net sales. The estimated inventory at May 31 $

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in…