At the end of Rutherford Department Stores fiscal year on December 31, 2012, these accounts appeared in its adjusted trial balance.

Freight-in -$5,600

Inventory - 40,500

Purchases - 447,000

Purchase Discounts - 12,000

Purchase Returns and Allowances - 6,400

Sales Revenue - 725,000

Sales Returns and Allowances - 11,000

Additional facts:

1. Merchandise inventory on December 31, 2012, is $65,000.

2. Rutherford Department Store uses a periodic system.

Instructions:

Prepare an income statement through gross profit for the year ended December 31, 2012.

Please do not copy from Chegg otherwise I have to report the answer. Explain the answer thoroughly by showing each step of the calculation.