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 $8,200. The following information was available from Hodge's accounting records for Product Tex:

Inventory at November 1, 2013 $108,000

Purchases from November 1, 2013, to date of fire 144,000

Net sales from November 1, 2013, to date of fire 208,000

Based on recent history, Hodge had a gross margin (profit) on Product Tex of 25% of net sales.

Required:

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