The inventory of Truckstar Corp. was destroyed by fire on March 1. From an examination of the accounting records, the following data for the first 2 months of the year are obtained: Sales Revenue $55,000, Sales Returns and Allowances $1,100, Purchases $33,500, Frieght-In $1,500, and Purchase Returns and Allowances $1,600. Determine the merchandise lost by fire, assuming:

A beginning inventory of $21,500 and a gross profit rate of 40% on net sales.

A begginning inventory of $38,500 and a gross profit rate of 35% on net sales.