On January 1, 2007, the Merchandise Inventory of Colaw, Inc

Multiple Choice

On January 1, 2007, the merchandise inventory of Colaw, Inc.was $800,000.During 2007 Colaw purchased $1,600,000 of merchandise and recorded sales of $2,000,000.The gross profit rate on these sales was 25%.What is the merchandise inventory of Colaw at December 31, 2007?

A) $400,000.
B) $500,000.
C) $900,000.
D) $1,500,000.