Gross Profit Method

A fire completely destroyed all the inventory of Glisan Lumber Yard on August 5, 20--. Fortunately, the accounting records were not destroyed in the fire. The following information is provided by Glisan Lumber Yard for the time period January 1 through August 5:

Beginning inventory, January 1, 20--$120,000Net purchases, January 1 through August 5408,000Net sales, January 1 through August 5750,000Normal gross profit as a percentage of sales40%

Required:

Estimate the amount of merchandise inventory destroyed in the fire on August 5 using the gross profit method.

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