Sunset Retailers uses the periodic inventory system to account for its inventory transactions. The following account titles and balances were drawn from Sunset’s records for the year 2007: beginning balance in inventory, \($24,900\); purchases, \($306,400\); purchase returns and allowances, \($9,600\); sales, \($680,000\); sales returns and allowances, \($6,370\); transportation-in, \($2,160\); and operating expenses, \($51,400\). A physical count indicated that \($29,300\) of merchandise was on hand at the end of the accounting period.

Required:

a. Prepare a schedule of cost of goods sold.

b. Prepare a multistep income statement.