The merchandise inventory was destroyed by fire on Aug. 19. The following is the data: Jan 1 Merchandise inventory $360,000 1/1 – 8/19 Purchases (net) 3,200,000 sales (net) 5,200,000 Estimated

The merchandise inventory was destroyed by fire on Aug. 19. The following is the data:

Jan 1 Merchandise inventory $360,000

1/1 – 8/19 Purchases (net) 3,200,000

sales (net) 5,200,000

Estimated gross profit rate 35%

a. Estimate the cost of the merchandise destroyed

b Briefly describe the situations in which the gross profit method is useful

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