Chapter 4. Preparing the statement - direct method The following information relates to transactions that occurred during a reporting period. An entity paid $175,000 cash to its creditors. The openir and closing balances of its creditors' accounts were $220,000 and $425,000 respectively. The opening balance of inventory was $340,000 and the cost of sales was $545,000. Assume all inventory purchases were on credit. What was the closing balance of inventory at the end of this period? Your response: A. NII OB. $175,000 C. $545,000 D. $720,000