David Hasselholf Company lost most of its inventory in a fire in December just before the year-end

Question:

David Hasselholf Company lost most of its inventory in a fire in December just before the year-end physical inventory was taken. Corporate records disclose the following.
Inventory (beginning) $ 80,000 Sales $415,000
Purchases 280,000 Sales returns 21,000
Purchase returns 28,000 Gross profit % based on selling price 34%
Merchandise with a selling price of $30,000 remained undamaged after the fire, and damaged merchandise has a of $7,150. The company does not carry fire insurance on its inventory.

Instructions
Prepare a formal labeled schedule computing the fire loss incurred, using the gross profit method.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...