On November 21, 2010, a fire at Hodge Company’s warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $10,000. The following information was available from Hodge’s accounting records for Product Tex:

Inventory at November 1, 2010 .............$100,000

Purchases from November 1, 2010 to date of fire ...... 140,000

Net sales from November 1, 2010 to date of fire ...... 220,000

Based on recent history, Hodge had a gross margin (profit) on Product Tex of 30% of net sales.

Required

Prepare a schedule to calculate the estimated loss on the inventory in the fire, using the gross margin (profit) method. Show supporting computations in good form.