RK Company began September with inventory of $45,300. The business made net purchases of $33,300 and had

Question:

RK Company began September with inventory of $45,300. The business made net purchases of $33,300 and had net sales of $61,600 before a fire destroyed the company’s inventory. For the past several years, RK’s gross profit percentage has been 45%. Estimate the cost of the inventory destroyed by the fire.
Identify another reason that owners and managers use the gross profit method to estimate inventory.