LMN Company’s financial data includes:

• Beginning Inventory: $30,000
• Purchases: $100,000
• Ending Inventory: $20,000
• Sales: $190,000
• Sales Returns: $8,000
• Sales Discounts: $4,000
• Operating Expenses: $35,000

Requirements:

1. Compute the cost of goods sold.
2. Calculate the gross profit.
3. Prepare the income statement.
4. Determine the net income.
5. Discuss the impact of operating expenses on profitability.