As a Result of Taking a Physical Inventory Count on December

As a result of taking a physical inventory count on December 31, 2010, the Samantha Company inventory was determined to be $50, 000.The auditors for Samantha suspected an inventory shortage and used the gross profit method to estimate the ending inventory.The accounting records for the company contained the following information: $\begin{array}{ll}\text { Inventory }(1 / 1 / 10) & \$ 130,000 \\\text { Purchases }(2010) & 770,000 \\\text { Sales }(2010) & 1,100,000 \\\text { Sales returns }(2010) & 100,000 \\\text { Grossprofit ratio } & 25 \% \text { of sales }\end{array}$ Using the gross profit method, what did the auditors estimate as the amount of the inventory shortage at December 31, 2010?

A) $ 75, 000
B) $100, 000
C) $150, 000
D) $250, 000