E9-26B (Gross Profit Method) Horton, Inc. suffered an inventory loss due to a flood. Beginning inventory $100,000 Net purchases 400,000 Sales 400,000 Inventory salvaged from flood 50,000 Instructions Use the gross profit method for estimating inventory to determine the loss due to the flood, assuming (a) gross profit is 25% of sales, and (b) Gross profit is 25% of cost. (markup on cost)