E8.16 (LO 3) (Gross Profit Method) Castlevania SA lost most of its inventory in a fire in December just before the year-end physical inventory was taken. The company’s books disclosed the following.

Beginning inventory R$170,000 Sales R$650,000 Purchases for the year 450,000 Sales returns 24,000 Purchase returns 30,000 Rate of gross margin on net sales 30%

Merchandise with a selling price of R$21,000 remained undamaged after the fire. Damaged merchandise with an original selling price of R$15,000 had a net realizable value of R$5,300.

Instructions Compute the amount of the loss as a result of the fire, assuming that the company had no insurance coverage.