During Year $1,$ Merchandising Company purchased $$40,000$ of inventory on account. Hardy sold inventory that cost $$24,500$ for $$38,000.$ Cash payments on accounts payable were $$22,000.$ There was $$26,000$ cash collected from accounts recievable. Hardy also paid $$5,1000$ cash for operating expenses. Assume that Hardy started the accounting period with $$20,000$ in both cash and commom stock.

What is the balance of gross margin from operating activities at the end of Year $1$