Medford Stores, a retailer in a shopping mall, prepared the following income statement for its operations for the month just ended: MEDFORD STORES Income Statement For the Month Ended April 30 Sales Cost of goods sold Gross profit Operating expenses: Sales commissions expense $96,250 Advertising expense 247,500 Lease expense 137,500 Depreciation expense 55,000 $1,925,000 907,500 1,017,500 Salaries expense Other operating expenses Income before income taxes Income tax expense Net income 110,000 68,750 715,000 302,500 75,625 $226,875 Sales commissions were 5% of sales. Income taxes were 25% of income before income taxes. Both should continue at the same rate for the remainder of the year. Medford Stores is preparing the budget for the month of May. If no basic changes are made, Medford's management expects that the income statement would be virtually identical to the one for April. However, Medford's management has decided to make some changes in the operations. The plans include the following: 1. Increase advertising expense by 15%. 2. Decrease all selling prices by 10%. 3. Increase the number of units sold by 20% as a result of the first two changes. a. Prepare a budgeted income statement for the month of May. Round all amounts on the income statement to the nearest dollar. MEDFORD STORES Budgeted Income Statement For the Month Ended May 31 Sales Cost of Goods Sold Gross Profit $ 0 0 0 Operating Expenses: Sales Commission Expense $ 0 Advertising Expense 0 Lease Expense 0 Depreciation Expense 0 Salaries Expense 0 Other Operating Expenses. 0 0 Income (Loss) before Income Taxes: 0 Income Tax Expense 0 Net Income (Loss) $ 0 b. Complete the following statement: Medford's management Check make the planned changes because the changes would result in a $ 0 in net income.