Deluxe Auto Parts holds inventory all over the world

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E6-28 Estimating ending inventory by the gross profit method [10–15 min]

Deluxe Auto Parts holds inventory all over the world. Assume that the records for
one auto part show the following:

Beginning inventory . . . . . .$ 220,000
Net purchases . . . . . . . . . . .800,000
Net sales . . . . . . . . . . . . . . .1,100,000
Gross profit rate . . . . . . . . .45%

Suppose this inventory, stored in the United States, was lost in a fire.

Requirement

1. Estimate the amount of the loss to Deluxe Auto Parts. Use the gross profit
method.