On November 21 2011 a fire at Hodge Company s warehouse
On November 21, 2011, 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 $12,000. The following information was available from the records of Hodge's periodic inventory system:

Based on recent history, Hodge's gross profit ratio on Product Tex is 35% of net sales.

Calculate the estimated loss on the inventory from the fire, using the gross profitmethod.
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