On April 25, 2016, a flash food destroyed one of High River Company’s warehouses, including all of the inventory inside. The food did not affect the inventory held at the company’s other locations. The accounting records were kept at High River’s head office in Canmore. A search through the records revealed the following information:
Purchases up to April 25............ $742,500
Cost of inventory on hand, January 1....... $137,200
Sales up to April 25.............. $1,028,000
Cost-to-sales ratio for 2016.............. 65%
A count of inventory on hand at the other locations revealed that inventory costed at $121,300 was on hand.
Required:
Estimate the cost of the inventory that was destroyed in the flash food.