A Company That Has Operated with a 30% Average Gross

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 the quarter 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) $20,000
B) $21,000
C) $24,000
D) $25,000
E) $26,000