Answer:
$1,190,000
Explanation:
The computation of cost of the inventory is given below:-
For computing the cost of inventory first we need to find out the cost of goods sold which is shown below:-
Cost of goods sold = Sales - Estimated gross profit
= $8,900,000 - ($8,900,000 × 20%)
= $7,120,000
Now, the Cost of the inventory = Beginning inventory + Purchase + Freight - Cost of goods sold
= $1,970,000 + $5,870,000 + $470,000 - $7,120,000
= $8,310,000 - $7,120,000
= $1,190,000
So, for computing the cost of the inventory we have applied the above formula.
