8. Davis Co., a retailer, uses a periodic inventory system. The following information is available from its accounts and records: Sales (from general ledger).......... Inventory (from general ledger).. Purchases (net of returns and discounts from general ledger)... $6,000,000 $200,000 ...........$2,600,000 Gross profit ratio (based on consistent average over the past several years).........60% *This is the beginning of the year inventory balance as of January 1, 20X9 based on a count. On the morning of September 26, 20X9, a fire destroyed large amounts of valuable inventory. A count showed remaining inventory on hand after the fire that had cost $110,000. Davis Co. plans to make a claim with its insurance company for the cost of the destroyed inventory. Using the gross profit method, what is the estimated cost of the destroyed inventory? a. $690,000 b. $400,000 Dc. $390,000 Od. $290,000 Topic covered in 4.7 Report a