Maria Gutierrez and Devin Cuncan recently graduated from the same university. After graduation they decided not to seek jobs at

established organizations but, rather, to start their own small business hoping they could have more flexibility in their personal lives for

a few years. Maria's family has operated Mexican restaurants and taco trucks for the past two generations, and Maria noticed there

were no taco truck services in the town where their university was located. To reduce the amount they would need for an initial

investment, they decided to start a business operating a taco cart rather than a taco truck, from which they would cook and serve

traditional Mexican$-$style street food.

They bought a used taco cart for $$15,000.$ This cost, along with the cost for supplies to get started, a business license, and street

vendor license brought their initial expenditures to $$20,000.$ They withdrew $$3,000$ from personal savings they had accumulated by

working part time during college, and they borrowed $$15,000$ from Maria's parents. They agreed to pay interest on the outstanding

loan balance each month based on an anual rate of $4$ percent. They will repay the principal over the next few years as cash becomes

available. They were able to rent space in a parking lot near the campus they had attended, believing that the students would

welcome their food as an alternative to the typical fast food that was currently available.

After two months in business, September and October, they had average monthly revenues of $$24,000$ and out$-$of$-$pocket costs of

$$19,000$ for rent, ingredients, paper supplies, and so on$,$ but not interest. Devin thinks they should repay some of the money they

borrowed, but Maria thinks they should prepare a set of forecasted financial statements for their first year in business before deciding

whether or not to repay any principal on the loan. She remembers a bit about budgeting from a survey of accounting course she took

and thinks the results from their first two months in business can be extended over the next $10$ months to prepare the budget they

need. They estimate the cart will last at least five years, after which they expect to sell it for $$3,000$ and move on to something else in

their lives. Maria agrees to prepare a forecasted $($pro forma$)$ income statement, balance sheet, and statement of cash flows for their

first year in business, which includes the two months already passed.

Required

a$.$ Prepare the annual pro forma financial statements that you would expect Maria to prepare based on her comments about her

expectations for the business. Assume no principal will be repaid on the loan.

Complete this question by entering your answers in the tabs below.

Complete this question by entering your answers in the tabs below.

Prepare the budgeted statement of cash flows.

Note: Cash outflows should be indicated by a minus sign.

$$ Income Statement

Prepare the budgeted balance sheet.

Note: Amounts to be deducted should be indicated by a minus sign.