1. Keen Company's accounting records indicated the following information:

Inventory, 1/1/12 $ 900,000

Purchases during 2012 4,500,000

Sales during 2012 5,700,000

A physical inventory taken on December 31, 2012, resulted in an ending inventory of $1,050,000. Keen's gross profit on sales has remained constant at 25% in recent years. Keen suspects some inventory may have been taken by a new employee. At December 31, 2012, what is the estimated cost of missing inventory?

a. $75,000.

b. $225,000.

c. $300,000.

d. $375,000.