XYZ Corporation:

• Beginning Inventory: $30,000
• Purchases: $120,000
• Ending Inventory: $25,000
• Sales Revenue: $180,000
• Sales Returns: $10,000
• Sales Discounts: $4,000
• Operating Expenses: $40,000

Requirements:

1. Prepare the Cost of Goods Sold (COGS) statement.
2. Calculate the Gross Profit.
3. Prepare the Income Statement.
4. Compute the Operating Profit Margin.
5. Discuss the importance of sales returns and discounts on net sales.