The following data were extracted from the accounting records of Catz Company for the year ended April 30, 2013:

Merchandise inventory, May 1, 2012 .... $ 175,000

Merchandise inventory, April 30, 2013 .... 240,000

Purchases ............... 1,400,000

Purchases returns and allowances ........ 20,000

Purchases discounts ............ 18,000

Sales ................. 2,250,000

Freight in ................. 13,000

a. Prepare the cost of merchandise sold section of the income statement for the year ended April 30, 2013, using the periodic inventory system.

b. Determine the gross profit to be reported on the income statement for the year ended April 30, 2013.