Saffordville Company lost 70% of its inventory in a fire on March 25, 2011. The accounting records showed the following gross profit data for February and March.
Saffordville Company is fully insured for fire losses but must prepare a report for the insurance company.
(a) Compute the gross profit rate for the month of February.
(b) Using the gross profit rate for February, determine both the estimated total inventory and inventory lost in the fire in March.