On March 31 a company needed to estimate its ending inventory to prepare its first quarter financial statements. The following information is available:

Beginning inventory, January 1: $4,000

Net sales: $80,000

Net purchases: $78,000

The company's gross margin ratio is 25%. Using the gross profit method, the estimated ending inventory value would be:

• A. $19,500.
• B. $60,000.
• C. $20,000.
• D. $22,000.
• E. $82,000.