ME HOW Markup percentage on cost Required: Hodge Company's What is the estimated inventory on September 28, 2016, immediately prior warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged E8-6 LO 8.3 Gross Profit Method: Estimation of Flood Loss On November 21, 2016, a flood at AICPA goods can be sold for $10,000. The following information was available from Hodge's accounting records for Adapted Product Tex: $100,000 140,000 220,000 Inventory at November 1, 2016 Purchases from November 1, 2016, to date of flood Net soles from November 1, 2016, to date of flood Based on recent history, Hodge had a gross margin (profit) on Product Tex of 30% of net sales. Required 1. Prepare a schedule to calculate the estimated loss on the inventory in the flood, using the gross profit method. Show supporting computations in good form. 2. Next Level Describe situations in which the gross profit method may not provide an accurate estimate of end- ing inventory sometimes must convert gross profit as a percent of cost of goods sold to annlied