Problem
Gross profit method. On December 31,2010 Felt Company's inventory burned. Sales for the year had been $1,400,000 and $980,000, respectively. The beginning inventory (January.1,2010)was $170,000,in the past Felt's gross profit has averaged 40%of selling price.
Task
• Compute the estimated cost of inventory burned give entries as of December 31, 2010 to close merchandise.