The financial records of Geneva Inc. were destroyed by fire at the end of 2023. Fortunately, the controller had kept the following statistical data related to the income statement: 

1. The beginning inventory was $84,000 and it decreased by 20% during the current year. 

2. There were 15,000 common shares outstanding for the entire year. 

3. Interest expense was $35,000. 

4. The income tax rate was 25%. 

5. Cost of goods sold amounted to $420,000. 

6. Administrative expenses were 20% of cost of goods sold but only 4% of gross sales. 

7. Selling expenses were four fifths of cost of goods sold.

Instructions

Based on the available data: 

a. Prepare a single-step income statement for the year ended December 31, 2023, including calculation of EPS. Expenses should be shown by function. 

b. Assume the average market price for the common shares is $980. What is Geneva’s price earnings ratio?