On July 5, 2021, a fire destroyed the entire inventory of Islamorada Art Warehouse. The following information is available from its accounting records, from January 1, through the date of the fire:

Inventory, January 1, 2021	$253,200
Purchases	630,000
Purchase returns	50,000
Freight-in	20,000
Sales	1,140,000
Sales returns	60,000
Normal gross margin	40%

Instructions

Compute the estimated cost of the inventory lost in the fire using the gross profit method.