Gross Profit Method A fire completely destroyed all the inventory of Glisan Lumber Yard on August 5, 20- Fortunately, the accounting records were not destroyed in the fire. The following information is provided by Glisan Lumber Yard for the time period January 1 through August 5: Beginning inventory, January 1, 20-- $105,000 Net purchases, January 1 through August 5 424,000 Net sales, January 1 through August 5 734,000 Normal gross profit as a percentage of sales 45% Required: Estimate the amount of merchandise inventory destroyed in the fire on August 5 using the gross profit method. 198,700 X Check My W Use the firm's normal gross profit as a percentage of net sales to estimate cost of goods sold and ending inventory in three steps: 1. Compute the cost of goods available for sale. 2. Estimate cost of goods sold by deducting the normal gross profit (net sales X normal gross profit as percentage of net sales) from net sales 3. Estimate the ending inventory by deducting cost of goods sold from the cost of goods available for sale.