Sandhill 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 companys fiscal year on November 30, 2022, these accounts appeared in its adjusted trial balance.

Accounts Payable		$ 36,800
Accounts Receivable		23,900
Accumulated DepreciationEquipment		95,200
Cash		11,200
Common Stock		49,000
Cost of Goods Sold		853,530
Freight-Out		8,910
Equipment		222,680
Depreciation Expense		19,300
Dividends		16,800
Gain on Disposal of Plant Assets		2,800
Income Tax Expense		14,000
Insurance Expense		12,600
Interest Expense		7,000
Inventory		36,500
Notes Payable		60,900
Prepaid Insurance		8,400
Advertising Expense		46,900
Rent Expense		47,600
Retained Earnings		19,700
Salaries and Wages Expense		166,180
Sales Revenue		1,265,000
Salaries and Wages Payable		8,400
Sales Returns and Allowances		28,000
Utilities Expense		14,300

Income Statement ?

Retained Earnings?

balance sheet

Profit margin?

Gross Profit?

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 10%. As a result, they estimate that gross profit will increase by $38,347 and expenses by $60,613. 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		$enter revised net income in dollars
Revised profit margin (Round to 1 decimal place, e.g. 15.2%)		enter Revised profit margin in percentages rounded to 1 decimal place	%
Revised gross profit rate (Round to 1 decimal place, e.g. 15.2%)		enter Revised gross profit rate in percentages rounded to 1 decimal place	%