Suppose in its income statement for the year ended June 30, 2022, The Clorox Company reported the following condensed data (dollars in millions). Salaries and wages expenses $460 Research and development expense $114
Depreciation expense 90 Income tax expense 566
Sales revenue 6,630 Loss on disposal of plant assets 46
Interest expense 161 Cost of goods sold 3,200
Advertising expense 499 Rent expense 105
Sales returns and allowances 230 Utilities expense 60
Assume a tax rate of 34%
a. Calculate the gross prohtrate and the profit margin.
b. Assume the marketing department has presented a plan to increase advertising expenses by $340 million. It expects this plan to result in an increase in both net sales and cost of goods sold of 25%. (Hint: Increase both sales revenue and sales returns and allowances by 25%). Prepare a multiple-step income statement.