Problem

Othello is a small pharmaceuticals store in Sydney. On the night of 27 June a fire incident destroyed the entire store and hence the inventory. The accounting records, which survived the fire, contained the following account balances for the period 1 January to 27 June:

Sales $330700

Sales returns and allowances $4200

Purchases $285000

Purchases returns and allowances $3150

Freight inwards $2400

Inventory balance, 1 January $59 300

Othello store has averaged 42% gross profit margin over the last 5 years.

Required (show all workings):

Determine the cost of the inventory that was destroyed, for insurance purposes.