P9-4B (L05) (Gross Profit Method) Higgs Company lost most of its inventory in a fire in November just before the year-end physical inventory was taken. Corporate records disclose the following. Inventory (beginning) $186,000 Sales $863,000 Purchases 667,000 Sales returns 64,000 Purchase returns 46,000 Gross profit % based on 25% net selling price Merchandise with a selling price of $65,000 remained undamaged after the fire, and damaged merchandise has a salvage value of $26,400. The company does not carry fire insurance on its inventory. Instructions Prepare a formal labeled schedule computing the fire loss incurred. (Do not use the retail inventory method.)