National Distributing Company uses a periodic inventory system to track its merchandise inventory and the gross profit method to estimate ending inventory and cost of goods sold for interim periods. Net purchases for the month of August were $31,000. The July 31 and August 31, 2016, financial statements contained the following information:

Income Statements
For the Months Ending
	August 31, 2016	July 31, 2016
Net sales	$50,000	$40,000

Balance Sheets At
	August 31, 2016	July 31, 2016
Assets:
Merchandise inventory	$28,000	$27,000

Required:

Determine the companys cost percentage.