Gross Profit Method

On November 21, 2013, a fire 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 $12,000. The following information was available from Hodge's accounting records for Product Tex:

Inventory at November 1, 2013		$104,000
Purchases from November 1, 2013, to date of fire		143,000
Net sales from November 1, 2013, to date of fire		236,000

Based on recent history, Hodge had a gross margin (profit) on Product Tex of 30% of net sales.

1. Prepare a schedule to calculate the estimated loss on the inventory in the fire, using the gross profit method.