You are provided with the following accounting information for Hanmer Ltd. (Hanmer), a retail electronics store, for the years ended December 31, 2016 and 2017:

Required:
a. Prepare income statements for Hanmer for 2016 and 2017.
b. What was Hanmer€™s gross margin and gross margin percentage each year? In which year do you think Hanmer was more successful? Explain.
c. Suppose Hanmer had the same gross margin percentage in 2017 as it did in 2016.
What would its gross margin and net income have been in 2017? Explain the impact of the different gross margin on Hamner€™s performance.
d. Examine your income statement and explain the change in net income from 2016 to2017.

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2017 2016 $ 187,500 Advertising and promotion expense Cost of inventory sold General and administrative expense Income tax expense Miscellaneous expense Rent expense Salaries, wages, and commissions expense Sales Utilities expense S 250,000 850,000 270,000 140,625 55,000 43,500 426,600 2,370,000 11,850 801,000 225,750 111,000 48,000 41,250 337,500 2,138,250 11,400