Miller Co. ships merchandise to Peyton's Outfitters in a consignment arrangement. The arrangement specifies that Peyton's Outfitters will attempt to sell the merchandise, and in return, Miller Co. will pay to Peyton's Outfitters a commission of 20% of the selling price on any merchandise sold. During the year, Miller Co. ships inventory with a cost of $80,000 to Peyton's Outfitters and pays shipping costs of $8,000. By the end of the year, $60,000 of the merchandise has been sold to customers for a total of $85,000. Miller Co. allocates $6,000 of the shipping costs to inventory sold and the other $2,000 to inventory not sold. Miller Co. also paid advertising costs during the year of $10,000.

What amount of inventory will Miller Co. report at year end?

(a) $20,000;

(b) $22,000;

(c) $30,000;

(d) $42,000; or

(e) $52,000.