Your comparison of the gross margin percent for James Drugs for the years 2013 through 2016 indicates a significant decline. This is shown by the following information: EB (Click the icon to view the information.) The following additional information is obtained from independent sources and the client's records as a means of investigating the controllers explanations: (Click the icon to view the additional information.) Requirements a. Evaluate the explanation provided by Ackers. Show calculations to support your conclusions. b. Which specific aspects of the client's financial statements require intensive investigation in this audit? Data Table 2016 2015 2014 2013 14,200 13,000 11,500 Sales (thousands) $ CGS (thousands) Gross margin Percent 10,300 6,510 3,790 36.8 9,145 8,268 7,291 4,732 36.4 5,055 $ 4,209 $ 35.6 36.6 73 A discussion with Maryssa Ackers, the controller, brings to light two possible explanations. She informs you that the industry gross profit percent in the retail drug industry declined fairly steadily for three years, which accounts for part of the decline. A second factor was the declining percent of the total volume resulting from the pharmacy part of the business. The pharmacy sales represent the most profitable portion of the business, yet the competition from discount drugstores prevents it from expanding as fast as the nondrug items such as magazines, candy, and many other items sold. Ackers feels strongly that these two factors are the cause of the decline