Laura’s Clothing Co. uses the periodic inventory system to account for its inventory transactions. The following account titles and balances were drawn from Laura’s records for the year 2009: beginning balance in inventory, $24,900; purchases, $306,400; purchase returns and allowances, $12,400; sales, $720,000; sales returns and allowances, $6,370; transportation-in, $1,820; and operating expenses, $51,400. A physical count indicated that $24,800 of merchandise was on hand at the end of the accounting period.

Required

a. Prepare a schedule of cost of goods sold.

b. Prepare a multi-step income statement.