Pharoah Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city areas. At the end of the company's fiscal year on November 30, 2022, these accounts appeared in its adjusted trial balance. Accounts Payable Accounts Receivable $26,400 17,100 Accumulated Depreciation-Equipment 68,000 Cash 8,000 Common Stock 35,000 Cost of Goods Sold 609,960 Freight-Out 6,440 Equipment 159,160 Depreciation Expense 13,700 Dividends 12,000 Gain on Disposal of Plant Assets 2,000 Income Tax Expense 10,000 Insurance Expense 9,000 nterest Expense 5,000 Insurance Expense Interest Expense 5,000 Inventory 26,100 Notes Payable 43,500 Prepaid Insurance 6,000 Advertising Expense 33,500 Rent Expense 34,000 Retained Earnings 14,100 Salaries and Wages Expense 118,740 Sales Revenue 904,000 Salaries and Wages Payable 6,000 Sales Returns and Allowances 20,000 Utilities Expense 10,300 Additional data: Notes payable are due in 2026. Your answer is partially correct. The vice president of marketing and the director of human resources have developed a proposal whereby the company would compensate the sales force on a strictly commission basis. Given the increased incentive, they expect net sales to increase by 15%. As a result, they estimate that gross profit will increase by $41,106 and expenses by $56,134. Compute the expected new net income. (Hint: You do not need to prepare an income statement.) Then, compute the revised profit margin and gross profit rate. Comment on the effect that this plan would have on net income and on the ratios, and evaluate the merit of this proposal. (Ignore income tax effects.) Revised net income Revised profit margin (Round to 1 decimal place, e.g. 15.2%) 2.98 % Revised gross profit rate (Round to 1 decimal place, e.g. 15.2%) 31.00 %