Gross Profit Method: Estimation of Flood Loss On June 30, 2019, a flash flood damaged the warehouse and factory of Padway Corporation, completely destroying the work-in-process inventory. There was no damage to either the raw materials or finished goods inventories. A physical inventory taken after the flood revealed the following valuations: Raw materials Work in process $67,000 0 Finished goods 117,000 The inventory on January 1, 2019, consisted of the following: Raw materials Work in process Finished goods $40,000 100,000 150,000 $290,000 A review of the books and records disclosed that the gross profit margin historically approximated 25% of sales. The sales for the first six months of 2019 were $340,000. Raw material purchases were $115,000. Direct labor costs for this period were $60,000, and manufacturing overhead was historically applied at 50% of direct labor Required: Compute the value of the work-in-process inventory lost at June 30, 2019. PADWAY CORPORATION Computation of Value of Work-in-Process Inventory Lost June 30, 2019 Sales Less: Gross profit Cost of goods sold Cost of goods manufactured and completed Raw materials, January 1, 2019 Raw materials available Raw materials used Cost of production 340,000 85,000 255,000 333 Sales Less: Gross profit Cost of goods sold Cost of goods manufactured and completed Raw materials, January 1, 2019 Raw materials available Raw materials used Cost of production Work-in-process inventory lost 340,000 85,000 255,000 0000 0000