On December 31, 2020, the entire inventory of Clementine Corp. was destroyed by a flood. Sales and purchases for the year had been $2.6 million and $1.2 million, respectively. The beginning inventory (Jan. 1, 2020) was $450,000. In the past, Clementines gross profit has averaged 40%. Clementine uses the periodic inventory system.

Instructions

a) Calculate the estimated cost of inventory destroyed.

b) Prepare journal entries at December 31, 2020 to close the sales and related cost of goods

sold accounts.