5. A fire destroyed the inventory of Abba Cadabba on April 15. The following data were found to be in the accounting records: Beginning Merchandise Inventory, January 1 $20,000 Purchases from January 1 to April 15 38,000 Purchase Returns and Allowances 3,500 Freight In 2,225 Sales from January 1 to April 15 86,000 Sales Returns and Allowances 2,500 Abba Cadabba has an estimated gross profit margin over the last three years of 54%.

Required: Calculate the amount of inventory destroyed in the fire using the Gross Profit Method.