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 (2,000units)	33,300
Total current assets	$123,300
Property, Plant, and Equipment
Equipment	$41,650
Less: Accumulated depreciation	11,650	30,000
Total assets	$153,300
Liabilities and Stockholders' Equity
Liabilities
Notes payable	$26,650
Accounts payable	46,650
Total liabilities	73,300
Stockholders' Equity
Common stock	$48,350
Retained earnings	31,650
Total stockholders' equity	80,000
Total liabilities and stockholders' equity	$153,300

Additional information accumulated for the budgeting process is as follows. Budgeted data for the year 2014 include the following.

4th Qtr. of 2014	Year 2014 Total
Sales budget (8,000units at $35)	$84,000	$280,000
Direct materials used	13,700	69,400
Direct labor	12,500	56,600
Manufacturing overhead applied	10,000	52,350
Selling and administrative expenses	16,350	76,000

To meet sales requirements and to have3,000units of finished goods on hand at December 31, 2014, the production budget shows9,000required 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 $11,690for depreciation on equipment. Interest expense is expected to be $3,500for 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 $20,650. It expects to pay $9,650on 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 $7,350. In 2014, the company expects to declare and pay an $6,650cash dividend. Unpaid income taxes at December 31 will be $6,650. The companys cash budget shows an expected cash balance of $7,950at December 31, 2014.

(a) Prepare a budgeted income statement for 2014.