Miller, Mims, & Mitchell ("MM&M") sells reusable diapers and disposable iPhones. As such, MM&M started 2021 with $94,000 of merchandise inventory on hand. During 2021, $400,000 in merchandise was purchased on account with credit terms of 1/15, n/45. All discounts were taken. Purchases were all made f.o.b. shipping point. MM&M paid freight charges of $7,500. Merchandise with an invoice amount of $5,000 was returned for credit. Cost of goods sold for the year was $380,000. MM&M uses a perpetual inventory system.

What is ending inventory, assuming MM&M also uses the gross method to record purchases?

(a) $112,490;

(b) $112,550;

(c) $116,500; or

(d) $120,300.