What is the ending inventory in the following case?A company that has operated with a 30% average gross profit ratio for a number of years had...

The company operates at 30% gross profit. It had sales of
$100,000 in the first quarter of the year. The inventory at the beginning of the year is
$18000 and during the quarter inventory worth $72000 was
purchased.

The total value of the initial inventory and
that purchased during the quarter is 18000 + 72000 = $90000. The sales is $100000. As
the gross profit is 30%, the cost of the sales is
$70000.

$90000 is the sum of the cost of inventory that was
already with the company and what it bought. Of this $70000 worth of inventory is
sold.

The value of the inventory that
remained with the company is $20,000 or the right answer is option C.