Operating expenses Sales returns and allowances Use the following financial information to answer questions 37-38. 25,000 3,000 110,000 55,000 5,000 Income tax expense.... 37. What is the gross profit margin? (a) 20.6% (b) 22.7% (c) 48.6% (d) 50.0% 38. What is the profit margin? (a) 20.6% (b) 22.7% (c) 48.6% (d) 50.0% 39. Mountain Corp. sells merchandise on account for $2,000 to Cliff Corp., terms 2/10, n/30 Cliff returns $800 worth of merchandise that was damaged, along with a cheque to settle the account within the discount period. What entry does Mountain make upon receipt of the cheque? (a) Cash. 1,200 1,200 1.160 784 32 (b) Cash. Sales Returns and Allowances Sales Discount 2,000 1,176 800 24 (c) Cash Sales Returns and Allowances Sales Discounts Accounts Receivable 2,000 1,160 40 800 (d) Cash.. Sales Discounts .. Sales Returns and Allowances 2,000