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CT5.6 Three years ago, Karen Suez and her brother-in- law Reece Jones opened Gigasales Department Store. For the first 2 years, business was good,
CT5.6 Three years ago, Karen Suez and her brother-in- law Reece Jones opened Gigasales Department Store. For the first 2 years, business was good, but the following condensed income statement results for 2025 were disappointing. Gigasales Department Store Income Statement For the Year Ended December 31, 2025 Net sales Cost of goods sold Gross profit Operating expenses Selling $100,000 expenses Administrative 20,000 expenses Net income $700,000 560,000 140,000 120,000 $ 20,000 Karen believes the problem lies in the relatively low gross profit rate of 20%. Reece believes the problem is that operating expenses are too high. 5- < >
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