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On January 1, 2019, the merchandise inventory of Colton Inc. was $800,000. During 2019, Colton purchased...

On January 1, 2019, the merchandise inventory of Colton Inc. was $800,000. During 2019, Colton purchased $1,600,000 of merchandise and recorded sales of $2,000,000. The gross profit rate on these sales was 25%. Using the gross profit method, what is the estimated merchandise inventory of Colton at December 31, 2019?

A.

$500,000
B.

$900,000
C.

$1,500,000
D.

$400,000
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