Wood$$s warehouse burned down on April $1$ of Year $4.$ The following information $($up to the date of the $$re$)$ was taken from the Year $4$ records of the company: inventory, January $1,$ $$60,000$ ; gross sales, $$320,000$ ; purchases, $$180,000$ ; sales returns $($restored to inventory$),$ $$10,000$ ; purchase returns and allowances, $$4,000$ ; and freight$-$in$,$ $$16,000.$ The cost of goods sold and gross pro$$t for the past three years follow.

Year Cost of Goods Sold Gross Profit

Year $1$ $$1,000,000$ $$250,000$

Year $2920,000240,000$

Year $31,000,000240,000$

Required

a$.$ Estimate the cost of the inventory destroyed in the $$re$,$ using the average gross pro$$t percentage for the past three years.

$$ Note: Assume no inventory was salvagable.

$$ Note: Do not use negative signs with any of your answers.

Average gross profit percentage for the past three years COGAS Answer

COGS,

Ending inventory loss Our estimate in part a would be questionable in all of the following cases except for: