Tilley-Mill Company takes a physical inventory at the end of each calendar-year accounting period to establish the ending inventory amount for financial statement purposes. Its financial statements for the past few years indicate an average gross margin on net sales of \(25 \%\). On July 18, a fire destroyed the entire store building and its contents. The records in a fireproof vault were intact. Through July 17, these records show:

The company was fully covered by insurance and asks you to determine the amount of its claim for loss of merchandise.

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Merchandise inventory, January 1 Merchandise purchases Purchase returns Transportation-in Sales Sales returns $ 672,000 9,408,000 134,400 504,000 14,336,000 672,000