[jmancer]

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

[morgaine300]

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.