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Question - Emily Ltd. prepares monthly financial statements. Inventory is counted only at year end; thus, month- end inventories must be estimated. All sales are made on account. The rate of markup on cost is 25%. The following information relates to the month of May:
Accounts receivable, May 1 $42,000
Accounts receivable, May 31 48,500
Collections of accounts during May 87,000
Inventory, May 1 53,000
Purchases during May 85,000
Required - Calculate the estimated cost of the inventory on May 31.
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