Over the past four years the gross profit rate for Davidson Company was 26%. Last week a fire destroyed all of Davidson’s inventory. Luckily, all the records for Davidson were in a fireproof safe and indicated the following facts:
Inventory (January 1, 201X) ....... $ 39,200
Sales ................. 128,000
Sales Returns ............. 3,300
Purchases ................ 78,200
Purchases Returns and Allowances ..... 3,000
Estimate the cost of inventory that was lost in the fire.