On January 20, 2014, Stewart Company's records revealed the following information:

A fire destroyed the entire inventory on January 20, 2014, except for purchases in transit, FOB shipping point of $6,000, and goods having a selling price of $4,700 that were salvaged from the fire. The salvaged goods had an estimated salvage value of $2,900. The average gross profit on net sales in previous periods was 40%.
Required:
1. Compute the cost of the inventory lost in the fire.
2. Next Level If a company discloses that it uses a periodic inventory system, what concerns might you have about its interim financial statements?

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53,600 Purchases discounts taken Inventory, July 1, 2013 Purchases, July 1,2013-January 20, 2014368,000 Sales, July 1, 2013-January 20, 2014 Purchases retums $5,800 3,800 6,600 Freight-in 583,000 Sales retums 11,200