GHI Inc. Annual Financial Information for the Year Ending December 31, 2023:

• Sales Revenue: $700,000
• Cost of Goods Sold: $420,000
• Administrative Expenses: $120,000
• Interest Expense: $14,000
• Income Tax Expense: $35,000
• Dividends Paid: $40,000
• Beginning Retained Earnings: $140,000

Instructions:

1. Construct an income statement.
2. Construct a statement of retained earnings.
3. Determine the earnings per share if there are 35,000 shares outstanding.
4. Assess the effect of a 10% increase in administrative expenses on net income.
5. Evaluate the impact of increasing dividends by 25% on retained earnings.