Retirement tax questions

Yes. ‌It's ok that your income is too high. That makes the original IRA non-deductible by default, not by choice.  The next step is to report the rollover.  

1. Revisit the 1099-R you already entered — you can use the magnifying glass in the upper right of your screen, type "1099-R", and choose the first option "Jump to 1099-R"
2. Choose the page and magnifying glass icon next to the 1099-R from Merrill to edit it.
3. Continue until you reach the screen that says, "Did you roll over all of this $7,000.00 (Box 1) to another retirement account?".  Answer "Yes"

Here are the full instructions to report a Backdoor Roth: How do I enter a backdoor Roth IRA conversion?