Gross Profit Method: Estimation of Flood Loss On November 21, 2016, a flood at Hodge Company's warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $8,600. The following information was available from Hodge's accounting records for Product Tex: Based on recent history, Hodge had a gross margin (profit) on Product Tex of 35% of net sales. Required: 1. Prepare a schedule to calculate the estimated loss on the inventory in the flood, using the gross profit method