Problem 5-22A Estimating ending inventory: gross margin method LO 5-4

The inventory of Dons Grocery was destroyed by a tornado on October 6 of the current year. Fortunately, some of the accounting records were at the home of one of the owners and were not damaged. The following information was available for the period of January 1 through October 6:

Beginning inventory, January 1	$	140,000
Purchases through October 6	$	670,000
Sales through October 6	$	1,100,000

Gross margin for Dons has traditionally been 30 percent of sales.

a. For the period ending October 6, compute the following:

(please answer the question in this format)

a. cost of goods sold
b. Estimates ending inventory
c. Estimated inventory shortage