Food Depot Ltd If the Gross Margin Method Is Used to Estimate Ending

Food Depot Ltd. assembled the following information at the end of the current reporting period: $\begin{array} { | l | l | } \hline \text { Sales revenue } & \$ 56,400 \\\hline \text { Beginning inventory } & 21,250 \\\hline \text { Purchases } & 9,000 \\\hline \text { Purchase returns } & 600 \\\hline \text { Freight-in } & 950 \\\hline \text { Selling expense } & 15,750 \\\hline \text { Mark-up on cost (estimated) } & 25 \text { percent } \\\hline\end{array}$
If the gross margin method is used to estimate ending inventory, what amount should be reported as pre-tax income or loss?

A) $4,470 loss
B) $15,975 income
C) $26,870 income
D) $29,370 income
E) $5,345 loss