Assume you work as an accountant in the merchandising division of a large public company that makes and sells athletic clothing. To encourage the merchandising division to earn as much profit on each individual sale as possible, the division manager's pay is based, in part, on the division's gross profit percentage. To encourage control over the division's operating expenses, the manager's pay also is based on the division's net income. You are currently preparing the division's financial statements. The division had a good year, with initial (gross) sales revenue of $100,000, cost of goods sold of $50,000, sales returns and allowances of $6,000, sales discounts of $4,000, and salaries and wages expenses of $30,000. (Assume the division does not report income taxes.) The division manager stresses that it would be in your personal interest to classify sales returns and allowances and sales discounts as selling expenses rather than subtract them directly from sales revenue on the division's income statement. He justifies this friendly advice by saying that he's not asking you to fake the numbershe just believes that those items are more accurately reported as expenses. Plus, he claims, being a division of a larger company, you don't have to follow GAAP. Required: 1. Prepare an income statement for the division using the format shown in this chapter for external reporting purposes. Using this