Gross sales 38640
Less: sales return and allowance 418
Sales discount
Net sales 38222
Cost of goods sold:
Inventory beginning Jan,01 6040
Purchases 20324
Add: transport in 714
Total 27078
Less: purchase return and allowance 512
Purchase discount 103
Net cost of purchase 20423
Cost of goods available 26463
Less inventory ending dec.31 7220
Cost of goods sold 19243
Gross profit on sales 18979
Operating expenses:
Allowance for doubtful accounts expense 113
Interest expense 60
Depreciation expense 320
Insurance expense 126
Supplies expense 80
Salaries expense 4840
Rent expense 2100
Miscellaneous 980
Net Income 10360
Add: interest income 46
Net Income 10406

Take out this one, it's balance sheet account. Allowance for doubtful accounts expense 113.
Interest expense can go with interest income and get a net.

The rest are fine.