The following trial balance pertains to Frank’s Hardware as of January 1, Year 2:
Account Title Beginning                                         Balances
Cash .......................................................................$ 89,000
Accounts receivable ................................................18,000
Merchandise inventory ........................................ 110,000
Accounts payable ...................................................... 6,500
Common stock ......................................................... 95,000
Retained earnings .................................................. 115,500

The following events occurred in Year 2. Assume that Frank’s uses the periodic inventory method.
1. Purchased land for $45,000 cash.
2. Purchased merchandise on account for $190,000, terms 2/10, n/30.
3. Paid freight of $1,700 cash on merchandise purchased FOB shipping point.
4. Returned $12,000 of defective merchandise purchased in Event 2.
5. Sold merchandise for $165,000 cash.
6. Sold merchandise on account for $210,000, terms 3/10, n/45.
7. Paid cash within the discount period on accounts payable due on merchandise purchased in Event 2.
8. Paid $22,000 cash for selling expenses.
9. Collected $145,000 of the accounts receivable from Event 6 within the discount period.
10. Collected $60,000 of the accounts receivable but not within the discount period.
11. Paid $12,600 of other operating expenses.
12. A physical count indicated that $110,000 of inventory was on hand at the end of the accounting period.

Required
Use the relevant information contained in the events to prepare a schedule of costs of goods sold and an income statement.