Howard's Supply Co. suffered a fire loss on April 20, 2021. The company's last physical inventory was taken January 30, 2021, at which time the inventory totaled $237,000. Sales from January 30 to April 20 were $617,000 and purchases during that time were $467,000. Howard's consistently reports a 25% gross profit. The estimated inventory loss is:   Multiple Choice   $498,250.   $229,250.   $241,250.   None of these answer choices are correct.

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.