(Learning Objectives 1, 4: Estimating inventory by the gross profi t method; preparing the income statement) Assume Thompson Company, a copy center, lost some inventory in a fi re. To fi le an insurance claim, Thompson Company must estimate its inventory by the gross profi t method. Assume that for the past two years Thompson Company’s gross profi t has averaged 41% of net sales. Suppose the Thompson 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 October income statement for this product through gross profi t. Show the detailed computations of cost of goods sold in a separate schedule.