Gross Profit Method: Estimation of Flood Loss
On November 21, 2016, a flood at Hodge Company's warehouse
caused severe damage to its entire inventory of Product Tex. Hodge
estimates that all usable damaged goods can be sold for $8,400. The
following information was available from Hodge's accounting records
for Product Tex:
Inventory at November 1, 2016
$116,000
Purchases from November 1, 2016, to date of flood
142,000
Net sales from November 1, 2016, to date of flood
235,000
Based on...