On October 31 . a flood at Comfort Company's only warehouse caused severe damage to its entire inventory. Based on recent history, Comfort has a gross profit of 40 percent of net sales. The following information is available from Comfort's records for the ten months ended October 31: Inventory, January 1 .................................. $ 520,000 Purchases
............................................. 4,120,000 Purchase returns ...................................... 60,000 Sales ................................................. 5,600,000 Sales discounts ....................................... 400,000 A physical inventory disclosed usable damaged goods which Comfort estimates can be sold for $70,000 . Using the gross profit method, the estimated cost of goods sold for the ten months ended October 31 should be
a. $680,000.
b. $1,080,000
c. $3,120,000.
d. $3,640,000.
C
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