A fire destroyed the Churchhill Company's warehouse on March 15, 2014. Only goods with a normal selling price of $12,500 and a net realizable value of $5,000 were saved. The following information is available from the company's records : Inventory in warehouse, 01/01/2014 $250,000 Purchases 01/01/14- 03/15/14 $620,000 Purchase returns $9,500 Freight-in $14,000 $850,000 Sales, 01/01/13 - 03/15/14 Sales Return $20,000 For the period from 2009 - 2013, Churchill had a gross profit of $2,100,000 on net sales of $6,000,000. Estimate Churchill's inventory loss from the fire using the Gross Profit method.

A fire destroyed the Churchhill Company's warehouse on March 15, 2014. Only goods with a normal selling price of $12,500 and a net realizable value of $5,000 were saved. The following information is available from the company's records : Inventory in warehouse, 01/01/2014 $250,000 Purchases 01/01/14- 03/15/14 $620,000 Purchase returns $9,500 Freight-in $14,000 $850,000 Sales, 01/01/13 - 03/15/14 Sales Return $20,000 For the period from 2009 - 2013, Churchill had a gross profit of $2,100,000 on net sales of $6,000,000. Estimate Churchill's inventory loss from the fire using the Gross Profit method.