The M&E Company had a fire that destroyed most of its inventory and would like to put in a claim with its insurance company. Records indicate the following:

Inventory (beg of year): $160,000 Sales revenue: $880,000

Purchases: $580,000 Sales returns: $ 42,000

Purchase returns: $ 56,000 Freight in: $ 5,000

Gross profit based on selling price: 40%

Merchandise inventory at cost totaled $12,000 and merchandise inventory with a selling price of $40,000 (hint, must convert to cost) remained undamaged.

Required:

Calculate the amount of inventory loss that M&E can claim.