Using Financial Reports: Financial Statement Inferences

The following amounts were selected from the annual financial statements for Genesis Corporation at December 31, 2012 (end of the third year of operations):

From the 2012 income statement:

Sales revenue....................$275,000

Cost of goods sold.................. (170,000)

All other expenses (including income tax) .......... (95,000)

Net income..................... $ 10,000

From the December 31, 2012, balance sheet:

Current assets.................... $ 90,000

All other assets..................... 212,000

Total assets..................... $302,000

Current liabilities.................... $ 40,000

Long-term liabilities.................. 66,000

Capital stock (par $10) ................. 100,000

Paid-in capital.................... 16,000

Retained earnings.................... 80,000

Total liabilities and stockholders’ equity........... $302,000

Required:

Analyze the data on the 2012 financial statements of Genesis by answering the questions that follow. Show computations.

1. What was the gross margin on sales?

2. What was the amount of EPS?

3. If the income tax rate was 25%, what was the amount of pretax income?

4. What was the average sales price per share of the capital stock?

5. Assuming that no dividends were declared or paid during 2012, what was the beginning balance (January 1, 2012) of retained earnings?