A substantial portion of inventory owned by Prairie Hunting Goods was recently destroyed when the roof collapsed during a rainstorm. Prairie also lost some of its accounting records. Prairie must estimate the loss from the storm for insurance reporting and financial statement purposes. Prairie uses the periodic inventory system. The following accounting information was recovered from the damaged records.

The value of undamaged inventory counted was \(\$ 2,000\). Historically Prairie's gross margin percentage has been approximately 25 percent of sales.
Required
Estimate the following:

a. Gross margin in dollars.

b. Cost of goods sold.

c. Ending inventory.

d. Amount of lost inventory.

Transcribed Image Text:

Beginning inventory Purchases to date of storm Sales to date of storm $ 25,000 100,000 137,500