The following data were extracted from the accounting records of Meridian Designs for the year ended March 31, 2012.

Merchandise Inventory, April 1, 2011 $530,000
Merchandise Inventory, March 31, 2012 325,000
Purchases 230,000
Purchase Returns and Allowances 25,000
Purchase Discounts 10,000
Sales 820,000
Sales Returns 20,000
Freight In 3,000

Prepare the cost of merchandise sold section of the income statement for the year ended March 31, 2011, using the periodic method. Also determine gross profit.