In the early morning of January 1, 2021, all of Minnesota Corp.'s inventory was destroyed by fire. The following information was available for calendar 2020:

Sales............................................... $1,250,000

Net purchases.................................1,350,000

Beginning inventory.......................110,000

Minnesota's gross profit on sales has averaged 35.0% for several years.

Instructions

1. Calculate the estimated cost of the inventory destroyed. Show all details.
2. Prepare necessary entries at December 31, 2020, to record the loss of the inventory.