Food Grocery Ltd. lost most of its inventory in a flood in July, just before its fiscal year-end July 31. The company's books disclosed the following: Beginning inventory Sales Purchases for the year Sales returns Purchase returns Gross profit on net sales $440,000 1,350,000 850,000 50,000 55,000 40% Merchandise with a selling price of $42,000 remained undamaged after the flood. After the flood there was also damaged merchandise with an original selling price of $30,000 and a net realizable value of $10,600. Required: (a) Calculate the amount lost because of the flood, assuming that the company had no insurance coverage. (8 marks) (b) How would the loss be classified on the Income Statement of Food Grocery Ltd.? (2 marks)