A flash flood swept through Hat, Inc.’s warehouse on May 1. After the flood, Hat’s accounting records showed the following:
Inventory, January 1
$ 35,000
Purchases, January 1 through May 1
200,000
Sales, January 1 through May 1
250,000
Inventory not damaged by flood
30,000
Gross profit percentage on sales
40%
What amount of inventory was lost in the flood?
A. $55,000
B. $85,000
C. $120,000
D. $150,000