Ross Company, a camera store, lost some inventory in a fire on December 15. To file an insurance claim, the company must estimate its December 15 inventory using the gross profit method. For the past two years, Ross Company’s gross profit has averaged 44% of net sales. Its inventory records reveal the following data:

Inventory, December 1............. $ 57,700
Transactions December 1–15:
Purchases ................................. 490,500
Purchase discounts ................... 15,000
Purchase returns....................... 70,500
Sales ......................................... 664,000

Requirements

1. Estimate the cost of the lost inventory using the gross profit method.

2. Prepare the income statement for December 1 through December 15 for this product through gross profit. Show the detailed computation of cost of goods sold in a separate schedule.