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Data for JKL Retailers: Item Amount Gross Sales $800,000 Sales Returns and Allowances $35,000 Net Sales $765,000 Cost of Goods Sold $400,000 Operating Expenses $200,000

Data for JKL Retailers:

Item

Amount

Gross Sales

$800,000

Sales Returns and Allowances

$35,000

Net Sales

$765,000

Cost of Goods Sold

$400,000

Operating Expenses

$200,000

Marketing Expenses

$40,000

Interest Expense

$10,000

Tax Rate

29%

Requirements:

  1. Prepare an income statement.
  2. Calculate the gross profit margin.
  3. Determine the amount of taxes paid.
  4. Evaluate the impact of a 5% increase in marketing expenses on net income.
  5. Discuss the influence of interest expense on profitability.

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