A Company That Has Operated with a 30% Average Gross

question 73

Multiple Choice

A company that has operated with a 30% average gross profit ratio for a number of years had $110,000 in net sales during the first quarter of this year. If it began thequarter with $28,000 in inventory at cost and purchased $75,000 of merchandise during the quarter, its estimated ending inventory by the gross profit method is:

• A)$25,000.
• B)$26,000.
• C)$21,000.
• D)$20,000.
• E)$24,000.