Problem 8: Gross Profit Method

On September 22, 2018, a flood destroyed some merchandise inventory in a warehouse owned by the Rocklin Sporting Goods Company. Only $100,000 inventory survived the flood. The following information is available from the records of the companys periodic inventory system:

Inventory, January 1, 2018 $240,000

Net purchase, January through September 22 570,000

Net sales, January 1 through September 22 600,000

Gross profit ratio 30%

Required: Estimate the cost of inventory destroyed in the flood using the gross profit method.