A fire destroyed the Churchill 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, 1/1/14...................................$250,000
Purchases, 1/1/14-3/15/14..........................................620,000
Purchase returns........................................................9,500
Freight-in..............................................................14,000
Sales, 1/1/13-3/15/14...............................................850,000
Sales returns..........................................................20,000
For the period from 2009 through 2013, Churchill had a gross profit of $2,100,000 on net sales of $6,000,000.