Levi Johnson Company lost 70% of its inventory in a fire on March 25, 2006. The accounting records showed the following gross profit data for February and March.

Levi Johnson Company is fully insured for fire losses but must prepare a report for the insurance company.
Instructions

(a) Compute the gross profit rate for the month of February.

(b) I sing the gross profit rate for February, determine both the estimated total inventory and inventory lost in the fire in March.

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February March (to 3/25) Net sales $300,000 $260,000 Net purchases 197.800 191.000 Freight-in 2.900 4.000 Beginning inventory 4.500 25.200 Ending inventory 25,200 ?