A company’s entire inventory is destroyed in a fire. Beginning inventory was $25,000. Net sales and purchases up to the date of the fire were $70,000 and $40,000, respectively. The company estimates its gross profit ratio as 20%
of net sales. Using the gross profit method, the estimated inventory lost in the fire is

a. $9,000.

b. $11,000.

c. $41,000.

d. none of the above.