Problem 9-6A (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) 32,120 Total current assets $122,120 Property, Plant, and Equipment Equipment $41,060 Less: Accumulated depreciation 11,060 30,000 Total assets $152,120 Liabilities and Stockholders' Equity Liabilities Notes payable $26,060 Accounts payable 46,060 Total liabilities 72,120 Stockholders' Equity Common stock $48,940 Retained earnings 31,060 Total stockholders' equity 80,000 Total liabilities and stockholders' equity $152,120 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 (8,000 units at $35) $84,000 $280,000 Direct materials used 14,880 69,400 Direct labor 12,500 56,600 Manufacturing overhead applied 10,000 52,940 Selling and administrative expenses 16,940 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 $10,746 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 $20,060. It expects to pay $9,060 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 $6,760. In 2014, the company expects to declare and pay an $6,060 cash dividend. Unpaid income taxes at December 31 will be $6,060. The companys cash budget shows an expected cash balance of $7,950 at December 31, 2014.

A) Prepare a budgeted income statement for 2014