Response to the following problem:
Prepare an income statement for a trading business through the gross profit on-sales section.
The following account balances were found in the ledger of the Reliable Dry Goods Co. as of December 31. 2002.
Merchandise Inventory, january I, 2002, $28,650; Sales $172,200; Sales Returns and Allowances, $3,430; Purchases $138,900; Freight on Purchases, $2,300; Purchases Returns and Allowances, $1,820; Purchases Discount, $1,300; Merchandise Inventory December 31, 2002,$31,200.