Exhibit 8-2 the Dormer Company Uses the Gross Profit Method

Exhibit 8-2 The Dormer Company uses the gross profit method to estimate its inventory in interim financial statements. The markup on cost is 50%. The following information is available: $\begin{array}{ll}\$ 12,500 & \text { January 1, 2014, inventory balance } \\25,000 & \text { Purchases } \\24,000 & \text { Sales During January }\end{array}$
-Refer to Exhibit 8-2. The estimated inventory at January 31, 2014, is

A) $25,500
B) $21,500
C) $16,000
D) $12,000