Gross Profit Method

The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records:

Jan. 1	Inventory	$225,500
Jan. 1 - Dec. 31	Purchases (net)	1,507,000
	Sales (net)	2,800,000
	Estimated gross profit rate	45%

a. Estimate the cost of the inventory destroyed.

Estimated Cost of Merchandise Destroyed
		$fill in the blank b66bcbfccfd3fd7_2
		fill in the blank b66bcbfccfd3fd7_4
		$fill in the blank b66bcbfccfd3fd7_6
	$fill in the blank b66bcbfccfd3fd7_8
	fill in the blank b66bcbfccfd3fd7_10
		fill in the blank b66bcbfccfd3fd7_12
		$fill in the blank b66bcbfccfd3fd7_14

b. Which method is used to estimate inventory cost in case of inventory destroyed by fire?