Answer:
$1,040,000
Explanation:
The calculation of cost of the inventory is shown below:-
Cost of Goods available for sale = Inventory balance + Purchase to date + Freight In
= $2,000,000 + $5,900,000 + $500,000
= $8,400,000
Cost of Goods Sold = Sales to date - (Sales to date × Gross profits)
= $9,200,000 - ($9,200,000 × 20%)
= $9,200,000 - $1,840,000
= $7,360,000
Estimated loss from fire = Cost of Goods available for sale - Cost of Goods Sold
= $8,400,000 - $7,360,000
= $1,040,000
For computing the estimated loss from fire we simply applied the above formula.
