The inventory of Alewa Company was destroyed by flood on Jun 1. From an examination of the accounting records, the following data for the first five months (Jan to May) of the year are obtained: Sales $55,000 Sales Returns and Allowances 2,000 Purchases 34,500 Freight-In 1,000 Purchase Returns and Allowances 1,400 Required: Determine the merchandise lost by flood using the Gross Profit Method, assuming a beginning inventory of $3,000 and a gross profit rate of 40% on net sales.