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Question - On November 21, 2021, a fire at Hodge Company's warehouse caused severe damage to its entire inventory of Product Tex. Hodge estimates that all usable damaged goods can be sold for $29,000. The following information was available from the records of Hodge's periodic inventory system:
Inventory, November 1 $185,000
Net purchases from November 1, to the date of the fire 157,000
Net sales from November 1, to the date of the fire 237,000
Based on recent history, Hodge's gross profit ratio on Product Tex is 40% of net sales. Calculate the estimated loss on the inventory from the fire, using the gross profit method.
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