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Problem 21-6A (Part Level Submission) Krause Industries' balance sheet at December 31, 2013, is presented below. KRAUSE INDUSTRIES Balance Sheet December 31, 2013 Assets Current Assets Cash $7,500 Accounts receivable 82,500 Finished goods inventory (2,000 units) 32,160 Total current assets $122,160 Property, Plant, and Equipment Equipment $41,080 Less: Accumulated depreciation 11,080 Total assets 30,000 $152,160 Liabilities and Stockholders' Equity Liabilities Notes payable $26,080 Accounts payable 46,080 Total liabilities 72,160 Stockholders' Equity Common stock $48,920 Retained earnings 31,080 Total stockholders' equity 80,000 Total liabilities and stockholders' equity $152,160 Additional information accumulated for the budgeting process is as follows. Budgeted data for the year 2014 include the following. Sales budget (8,000 units at $35) Direct materials used Direct labor Manufacturing overhead applied Selling and administrative expenses 4th Qtr. of 2014 Year 2014 Total $84,000 14,840 12,500 10,000 $280,000 69,400 56,600 52,920 16,920 76,000 To meet sales requirements and to have 3,000 units of finished goods on hand at December 31, 2014, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be $20. Krause Industries uses the first-in, first-out (FIFO) inventory costing method. Selling and administrative expenses include $10,778 for depreciation on equipment. Interest expense is expected to be $3,500 for the year. Income taxes are expected to be 40% of income before income taxes. All sales and purchases are on account. It is expected that 60% of quarterly sales are collected in cash within the quarter and the remainder is collected in the following quarter. Direct materials purchased from suppliers are paid 50% in the quarter incurred and the remainder in the following quarter. Purchases in the fourth quarter were the same as the materials used. In 2014, the company expects to purchase additional equipment costing $20,080. It expects to pay $9,080 on notes payable plus all interest due and payable to December 31 (included in interest expense $3,500, above). Accounts payable at December 31, 2014, include amounts due suppliers (see above) plus other accounts payable of $6,780. In 2014, the company expects to declare and pay an $6,080 cash dividend. Unpaid income taxes at December 31 will be $6,080. The company's cash budget shows an expected cash balance of $7,950 at December 31, 2014. Don't show me this message again for the assignment (a) Prepare a budgeted income statement for 2014. KRAUSE INDUSTRIES Budgeted Income Statement For the Year Ending December 31, 2014 $ Sales Cost of Goods Sold $ Finished Goods Inventory, January 1 Cost of Goods Manufactured Cost of Goods Available For Sale Finished Goods Inventory, December 31 Cost of Goods Sold Gross Profit Selling and Administrative Expenses Income from Operations Interest Expense Income before Income Taxes Interest Expense $ Net Income/ (Loss)