RST Enterprises provided the following data:

• Revenue: $1,200,000
• Sales Returns: $80,000
• Net Revenue: $1,120,000
• Cost of Goods Sold: $450,000
• Operating Expenses: $250,000
• Interest Expense: $25,000
• Tax Rate: 35%

Requirements:

1. Prepare an income statement.
2. Calculate the gross profit margin.
3. Determine the amount of taxes paid.
4. Analyze how a 5% decrease in operating expenses would affect net income.
5. Discuss the impact of interest expense on the company's profitability.