A fire destroyed the Churchhill Company's warehouse on March 15, 2014. Only goods with a normal selling price of $12,500 and a net realizable value of $5,000 were saved. The following information is available from the company's records:

Inventory in warehouse, 01/01/2014	$250,000
Purchases 01/01/14 - 03/15/14	$620,000
Purchase returns	$9,500
Freight-in	$14,000
Sales, 01/01/13 - 03/15/14	$850,000
Sales Return	$20,000

For the peroid from 2009 - 2013, Churchil had a gross profit of $2,100,000 on net sales of $6,000,000.

Required: Estimate Churchill's inventory loss from the fire using the gross profit method.