On February 26 a hurricane destroyed the entire inventory stored in a warehouse owned by the Rockford Corporation. The following information is available from the records of the companys periodic inventory system: beginning inventory, $255,000; purchases and net sales from the beginning of the year through February 26, $470,000 and $670,000, respectively; gross profit ratio, 40%. Estimate the cost of the inventory destroyed by the hurricane using the gross profit method.

Estimate the cost of the inventory destroyed by the hurricane using the gross profit method.

Beginning inventory
Plus: Net purchases
Cost of goods available for sale
Less: Cost of goods sold:
Net sales
Less: Estimated gross profit
Estimated cost of goods sold
Estimated cost of inventory destroyed