LMN Corporation provided the following financial data for the fiscal year ending December 31, 2023:

• Sales Revenue: $400,000
• Cost of Goods Sold: $220,000
• Selling Expenses: $70,000
• Interest Expense: $8,000
• Income Tax Expense: $20,000
• Dividends Paid: $25,000
• Beginning Retained Earnings: $80,000

Tasks:

1. Formulate an income statement.
2. Formulate a statement of retained earnings.
3. Determine the earnings per share if there are 20,000 shares outstanding.
4. Examine the effect of a 12% increase in sales revenue on net income.
5. Discuss how a significant increase in interest expense would affect the company’s financial stability.