Estimating Inventory On August 17, the company’s inventory was destroyed in a hurricane-related flood. For insurance purposes, the company must reliably estimate the amount of inventory on hand on August 17. The company uses a periodic inventory system. The following data have been assembled:

Estimate the company’s inventory as of August 17 using (1) last year’s gross profit percentage and (2) the gross profit percentage from two years ago.

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Inventory, January 1 Purchases, January 1-August 17 Sales, January 1-August 17 Historical gross profit percentages: Last year Two years ago $1,650,000 4,130,000 6,500,000 60% 65%