Question: On April 30, Continental Sales, Inc. lost its entire inventory in a flood. The following data is available from the firm's accounting records, which were recovered from the waterproof safe;
|
Inventory, January 1
|
$ 275,000
|
|
Purchases, January 1 -April 30
|
625,000
|
|
Net sales, January 1 - April 30
|
925,000
|
The gross profit of Continental Sales, Company, over the past several years has consistently averaged 35 percent of net sales. Using the gross profit method, determine the cost of the inventory lost in the flood on April 30.