I am not sure I did this right, I got C. as the answer. COGS/AVG. Inv =Inventory turnover so I came up with 1500000/300000=5 times and Sales/gross profit is the ratio
so 3750000/15000000=40%

Theel Company had a balance in the Merchandise inventory account of $260,000 at the beginning of the year and a balance of $340,000 at the end of the year. Inventory turnover for 2008 was 5 times. If gross profit as a percentage of sales was 40%, the amount of sales for 2008 was

a. 2,500,000
b. 1,500,000
c. 3,750,000
d. 937,000

You're on the right track but not quite there. The COGS is correct. However, the 40% they gave you is for gross profit, not for COGS. If gross profit is 40%, what percent does COGS have to be? If you get that answered, your method is correct and you'll have your sales.