On September 30, a fire at Lorna Company's only warehouse caused severe damage to the entire inventory. Based on recent history, the entity has a gross profit of 15% on costs. A physical inventory disclosed usable damaged goods which can be sold to a jobber for P120,000. The following information is available from the records for the nine months ended September 30 .

What is the estimated amount of fire loss?

a. P1,380,000

b. P1,110,000

c. P990,000

d. P1,500,000

Inventory, January 1 Purchases Purchase returns Net sales 1,500,000 3,000,000 400,000 2,990,000