Question: 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.