To determine the amount at which inventory should be reported on the December 31, Year 1 balance sheet, Meredith Company compiles the following information for its inventory of Product M on hand at that date:

Historical cost, $24,000

Replacement cost, $19,000

Estimated selling price, $22,000

Costs to complete and sell, $2,000

Normal profit margin as a % of selling price, 20%

The entire inventory of Product M that was on hand at December 31, Year 1, was completed in Year 2 at a cost of $1,750 and sold at a price of $22,150.