The Berkstrom Book ­Company’s accounting records include the following for 2014 (in thousands):

Other revenues............................................................................. $ 1,500

Income tax expense..................................................................... 5,920

Sales revenue................................................................................ 125,000

Total operating expenses.............................................................. 106,200

Requirements

1. Prepare Berkstrom Book’s single-step income statement for the year ended December 31, 2014, including EPS. Berkstrom Book had 800,000 shares of common stock and no preferred stock outstanding during the year.

2. Assume Berkstrom Book Company’s income from operations reflects that its core business been steadily increasing by about 5% per year over the past three years and that none of its operations have been discontinued. What does this say about the quality of its earnings?

3. Assume investors capitalize Berkstrom Book earnings from continuing operations at 8%. Estimate the price of one share of the company’s stock.