Sales revenue

$125,600

Less: Sales returns and allowances

(a)

Net sales

$122,040

Cost of goods sold:

Beginning inventory

$ 23,400

Purchases

$ (b)

Less: Purchase discounts

$1,300

Net purchases

$ (c)

Add: Transportation-in

6,550

Cost of goods purchased

81,150

Cost of goods available for sale

$104,550

Less: Ending inventory

(e)

Cost of goods sold

(d)

Gross profit

$ 38,600

Operating expenses

(f)

Income before tax

$ 26,300

Income tax expense

10,300

Net income

$ (g)