Gross Profit Method
on April 30, Greenfield Sales, Inc

Gross profit method
On April 30, Greenfield Sales, Inc. lost its entire inventory in a flood. The following information is available from the company's accounting records, which were recovered from the waterproof safe:
The gross profit of Greenfield Sales, Inc. over the past several years has consistently averaged 35% of net sales. Using the gross profit method, estimate the cost of the inventory lost in the flood on April 30.
$\begin{array}{|l|l|}\hline \text { Inventory, January } 1 & \$ 325,000 \\\hline \begin{array}{l}\text { Purchases, January } 1 \text { through April } \\30\end{array} & \$ 675,000 \\\hline \begin{array}{l}\text { Net sales, January } 1 \text { through April } \\30\end{array} & \$ 975,000 \\\hline\end{array}$