, a camera store, lost some inventory in a fire on October 15. To file an insurance claim, the company must estimate its October 15 inventory using the gross profit method. For the past two years, Watertown Company’s gross profit has averaged 45% of net sales. Its inventory records reveal the following data: LOADING.(Click the icon to view the data.) Read the requirementsLOADING Requirement 1. Estimate the cost of the lost inventory using the gross profit method. Add: Less: Net purchases Estimated cost of goods sold: Less: Estimated cost of goods sold Estimated cost of ending inventory lost Requirement 2. Prepare the income statement for October 1 to October 15 for this product through gross profit. Show the detailed computations of cost of goods sold in a separate schedule. Begin by showing the detailed computations of cost of goods sold. Add: Less: Less: Cost of goods sold Now prepare the October income statement for this product through gross profit. Watertown Company Income Statement (partial) Period Ending October 15 (date of the Fire) Gross profit
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