A fire destroyed the warehouse of Reed Enterprises, on August 31, 2017. The books and records of Reed showed the following information on that date Merchandise Inventory Jan 1, 2017 Purchases to date Freight - In Sales to date $600,000 1,000,000 40.000 $2,400,000 The gross profit ratio has averaged 50 % of sales for the past six years Required: Use the gross profit method to estimate the cost of inventory destroyed by fire O A. $1,640,000 OB. $440,000 O C. $1,200,000 OD. $1,600,000