Merchandise inventory, June 1	$393,250
Merchandise inventory, May 31	380,100
Purchases	1,579,600
Purchases returns and allowances	81,200
Purchases discounts	16,500
Sales	2,060,000
Freight in	59,250

Required:

Using the above data taken from Connor Inc., (a) prepare the cost of merchandise sold section of the income statement, and (b) determine the gross profit for the year ended May 31. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. You will not need to enter colons (:), it will automatically appear if required. Be sure to complete the statement heading.