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Estimate the cost of the merchandise destroyed and briefly

The merchandise inventory was destroyed by fire on August 19. The following data were obtained from the accounting records:

Jan. 1	Merchandise inventory	$ 360,000
Jan. 1-Aug. 19	Purchases (net)	3,200,000
	Sales (net)	5,200,000
	Estimated gross profit rate	36%

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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Accounting Basics: Estimate the cost of the merchandise destroyed and briefly

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