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Question - On September 22, 2016, a flood destroyed the entire merchandise inventory on hand in a warehouse owned by the Rocklin Sporting Goods Company. The following information is available from the records of the company's periodic inventory system:
Inventory, January 1, 2016 $148,000
Net purchases, January 1 through September 22 378,000
Net sales, January 1 through September 22 590,000
Gross profit ratio 20%
Required: Estimate the cost of inventory destroyed in the flood using the gross profit method.
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