In July, XYZ, Inc., a merchandising company, had sales of $295,000, selling expenses of $24,000, and administrative expenses of $29,000. The cost of merchandise purchased during the month was $215,000. The beginning balance in the merchandise inventory account was $25,000 and the ending balance was $30,000.

Required:

1. Income Statement in good form for July.

2. Is the operating income good or bad, and why?