York Farm Supply, Inc., began September with inventory of $45,700. The business made net purchases of $62,300 and had net sales of $107,600 before a fire destroyed the company’s inventory. For the past several years, York Farm Supply’s gross profit percentage has been 45%. Estimate the cost of the inventory destroyed by the fire. Identify another reason that owners and managers use the gross profit method to estimate inventory.

Beginning inventory..........................................................................

$ 45,700

Net purchases....................................................................................

  62,300

Cost of goods available.....................................................................

108,000

Estimated cost of goods sold:

       Net sales revenue........................................................................

 $107,600

       Less: estimated gross profit of 45%...........................................

(48,420)

       Estimated cost of goods sold.....................................................

  59,180

Estimated cost of inventory destroyed.............................................

$ 48,820