The following information is available for October for Star Company.

Beginning inventory $400,000

Net purchases 1,200,000

Net sales 2,400,000

Percentage markup on cost 66.67%

A fire destroyed Star's October 31 inventory, leaving undamaged inventory with a cost of $24,000. Using the gross profit method, the estimated ending inventory destroyed by fire is

A) $800,000. B) $136,000. C) $640,000. D) $616,000.