J R Company began May with inventory of $47,500. The business made net purchases of $30,900 and

Question:

J R Company began May with inventory of $47,500. The business made net purchases of $30,900 and had net sales of $62,100 before a fire destroyed the company’s inventory. For the past several years, J Rs gross profit percentage has been 35%. Estimate the cost of the inventory destroyed by the fire.
Identify another reason owner’s and managers use the gross profit method to estimate inventory.