1. As a result of taking a physical inventory count on December 31, 20106 the Cookie Company inventory was determined to be $425,000. The auditors for Cookie suspected an inventory shortage and used the gross profit method to estimate the ending inventory. The accounting records for the company contained the following information:
3. Inventory (1/1/16)$ 330,000Purchases (2016)1,770,000Sales (2016)2,200,000Sales returns (2016)100,000Gross profit ratio25% of sales
4. Using the gross profit method, what did the auditors estimate as the amount of the inventory shortage at December 31, 2016?
5. $75,000
6. $15,000
7. $100,000
8. $0