The following data are for XYZ merchandising company. The account balances are for 2020.

Merchandise inventory (January 1) $125,400

Merchandise inventory (December 31) 97,000

Marketing & distribution costs 212,500

Store utilities 27,500

General administrative expenses 134,500

Purchases 375,000

Transportation in 84,000

Purchase discounts 22,000

Purchase returns and allowances 18,000

Sales revenue 875,000

Required: a. Compute cost of goods purchased. (10 points)

b. Compute cost of goods sold (10 points)

c. Prepare an income statement for the year (20 points)