The following data were extracted from the accounting records of Meniscus Company for the year ended April 30, 2006:
Merchandise inventory, May 1, 2005 ....... $ 121,200
Merchandise inventory, April 30, 2006 ...... 142,000
Purchases ................... 985,000
Purchases returns and allowances ........ 23,500
Purchases discounts .............. 21,000
Sales .................... 1,420,000
Transportation in ............... 11,300
a. Prepare the cost of merchandise sold section of the income statement for the year ended April 30, 2006, using the periodic inventory method.
b. Determine the gross profit to be reported on the income statement for the year ended April 30, 2006.