Ames Company began the month of October with inventory of $18,000. The following inventory transactions occurred during the month:The company purchased merchandise on account for $26,500 on October 12. Terms of the purchase were 2/10, n/30. James uses the net method to record purchases. The merchandise was shipped f. o.b. shipping point and freight charges of $530 were paid in cash. On October 31, James paid for the merchandise purchased on October 12.During October merchandise costing $18,450 was sold on account for $28,600.It was determined that inventory on hand at the end of October cost $26,050.