Deluxe Auto Parts holds inventory all over the world. Assume that the records for one auto part show the following:
Beginning inventory . . . . . . $ 220,000
Net purchases . . . . . . . . . . . 800,000
Net sales . . . . . . . . . . . . . . . 1,100,000
Gross profit rate . . . . . . . . . 45%
Suppose this inventory, stored in the United States, was lost in a fire.
Requirement
1. Estimate the amount of the loss to Deluxe Auto Parts. Use the gross profit method.