(Learning Objectives 1, 4: Estimating inventory by the gross profi t method; preparing the income statement) Assume Ross Company, a sporting goods store, lost some inventory in a fi re. To fi le an insurance claim, Ross Company must estimate its ending inventory by the gross profi t method. Assume that for the past two years, Ross Company’s gross profi t has averaged 43% of net sales. Suppose Ross Company’s inventory records reveal the following data:

❙ Requirements 1. Estimate the cost of the lost inventory, using the gross profi t method.
2. Prepare the January income statement for this product through gross profi t. Show the detailed computation of cost of goods sold in a separate schedule.