Answer:
The correct answer is C.
Explanation:
Giving the following information:
In preparing their insurance claim on the inventory loss, they developed the following data: Inventory January 1, 2011, $300,000; sales and purchases from January 1, 2011, to May 1, 2011, $1,300,000 and $875,000, respectively. Southern California consistently reports a 40% gross profit.
Beginning inventory= 300,000
Purchases= 875,000
Total available for sale= 1,175,000
Cost of goods sold= 1,300,000*0.60= 780,000
Inventory= Total available for sale - COGS
Inventory= 1,175,000 - 780,000= $395,000
