Question - On May 15, 2016 the Smoky Bear Company inventory storage facility was completely destroyed in a fire. Offsite accounting records reflect the normal gross profit rate is 40% of sales. Sales to the date of the fine were $1,650,000. The April 30, 2016 inventory value was $800,000. Two purchases were made during May, before the fire, for the values of $500,000 and $800,000.
Using the Gross Profit Method determine the estimated inventory loss due to the fire.