When Janet Guthrie arrived at her dress shop on the morning of June 15, 2000, she found that thieves had broken in overnight and stolen much of her merchandise. The agent of Alright Insurance Company agreed to visit in the afternoon and promised he would write a check for the amount of the loss if she could verify it. Janet took a physi- cal inventory of the merchandise not stolen and determined that its cost was $2,000. Janet needs to make an estimate of the loss so that she can collect the insurance money and buy new merchandise. She asks for your help, and you agree to look at her account- ing records. She tells you that the store has been in business since January |, 1999, and that she does not use the retail method of accounting for inventory. You obtain the fol- lowing information:

UNMEn EGP Cendaniy Mal 999, Sarda itsecd deh as tn Smractatcaseecihaaiticcoread ..édokse $ 7,000 Purchases, 1999 49,000 Purchases, 2000 33,000 Sales (net), 1999 80,000 Sales (net), 2000 50,000 Purchases returns, 1999 4,000 Purchases returns, 2000 2,500 Inventory, January 1, 2000........00. .. 16,000 Physical inventory after theft ........cccsssssssssssssssssessssseee seaataeetureaceaseasi vat sbieuicaaree 2,000 Required: How much would you recommend that Janet settle for with the insurance company? What is the major assumption underlying your answer?