The following information for the year Year 1 is taken from the accounts of Tuttle Company. The company uses the periodic inventory method.

Inventory, December 31, Year 1	$	16,000
Purchases		80,000
Purchase returns and allowances		1,200
Purchase discounts		800
Freight on goods purchased under terms FOB shipping point		3,200
Freight on goods sold under terms FOB destination		1,600
Cost of goods sold		56,800

Based on this information, the inventory at December 31, Year 2 is:

• $55,200.

• $24,400.

• $38,800.

• $40,400.