GHI Company reported the following:

• Beginning Inventory: $45,000
• Purchases: $130,000
• Ending Inventory: $40,000
• Sales: $180,000
• Sales Returns and Allowances: $10,000
• Sales Discounts: $5,000
• Operating Expenses: $45,000

Requirements:

1. Prepare the cost of goods sold statement.
2. Calculate the gross profit.
3. Prepare the income statement.
4. Compute the net profit margin.
5. Discuss the importance of accurate inventory management.