The inventory of Highwater Ventures Corporation was destroyed during a flood on January 31, 2020. The following data for the first month of the year has been obtained: Sales $102,000, Sales Returns and Allowances $2,000, Purchases $56,400; Freight-In $2,400; and Purchase Discounts $2,800.According to the financial statements at year-end December 31, 2019 the balance of Merchandise Inventory was $40,000.Highwater Ventures has a gross profit rate of 30% on net sales and uses the periodic method of inventory.

Determine the merchandise lost during the flood.