Prepare and Evaluate Budgeted Income Statement Fairfield Stores, a retailer in a shopping mall, prepared the following income statement for its operations for the month just ended: Sales FAIRFIELD STORES Income Statement For the Month Ended April 30 Cost of goods sold Gross profit Operating expenses: Sales commissions expense $25,000 $500,000 240,000 260,000 Advertising expense 60,000 Lease expense 20,000 Depreciation expense 10,000 Salaries expense 30,000 Other operating expenses 15,000 160,000 100,000 Income before income taxes Income tax expense Net income 30,000 $70,000 Sales commissions were 5% of sales. Income taxes were 30% of income before income taxes. Both should continue at the same rate for the remainder of the year. Fairfield Stores is preparing the budget for the month of May. If no basic changes are made, Fairfield's management expects that the income statement would be virtually identical to the one for April. However, Fairfield's management has decided to make some changes in the operations. The plans include the following: 1. Increase advertising expense by 40%. 2. Decrease all selling prices by 10%. 3. Increase the number of units sold by 25% 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. FAIRFIELD STORES Budgeted Income Statement For the Month Ended May 31 Sales