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 $100,000 in sales during the first quarter of this year. If it began the quarter with $18,000 of inventory at cost and purchased $72,000 of inventory during the quarter, its estimated ending inventory by the gross profit method is:

A) $30,000.
B) $21,000.
C) $20,000.
D) $18,000.
E) $27,000.