Financial data for GHI Co. is as follows:

• Revenue: $700,000
• Sales Discounts: $20,000
• Sales Returns: $30,000
• Cost of Goods Sold: $300,000
• Operating Expenses: $90,000
• Interest Expense: $10,000
• Tax Rate: 29%

Requirements:

1. Prepare an income statement.
2. Compute the gross profit.
3. Calculate the effective tax rate.
4. Determine the net income.
5. Analyze the impact of a 5% decrease in cost of goods sold on profitability.