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The following information is available for October for Carla Vista Company.
Beginning inventory $470,000
Net purchases $1,340,000
Net sales $2,680,000
Percentage markup on cost 66.67%
Problem 1: A fire destroyed Carla Vista's October 31 inventory, leaving undamaged inventory with a cost of $27500. Using the gross profit method, the estimated ending inventory destroyed by fire is:
Option 1: $870,000.
Option 2: $687,167.
Option 3: $714,667.
Option 4: $174,500.
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