P $5.$ Holmes Brothers is a large retail furniture company that operates in two adjacent ware$-$

houses. One warehouse is a showroom, and the other is used to store merchandise. On

the night of April $22,$ a fire broke out in the storage warehouse and destroyed the mer$-$

chandise stored there. Fortunately, the fire did not reach the showroom, so all the mer$-$

chandise on display was saved.

Although the company maintained a perpetual inventory system, its records were

rather haphazard, and the last reliable physical inventory had been taken on December

In addition, there was no control of the flow of the goods between the showroom and

the warehouse. Thus, it was impossible to tell what goods should have been in either

place. As a result, the insurance company required an independent estimate of the

amount of loss. The insurance company examiners were satisfied when they were pro$-$

vided with the following information.

Merchandise inventory in showroom

Average gross margin

Prepare a schedule that estimates the amount of the inventory lost in the fire.