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On February 26, a hurricane destroyed the entire inventory stored in a warehouse owned by the Rockford Corporation. The following information is available from the records of the company's periodic inventory system: beginning inventory, $315,000; purchases and net sales from the beginning of the year through February 26, $590,000 and $790,000, respectively; gross profit ratio, 35%.
Problem 1: Estimate the cost of the inventory destroyed by the hurricane using the gross profit method.
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