Required information Problem 13-63 & Problem 13-64 (Algo) (LO 13-5, 6, 7, 9) [The following information applies to the questions displayed below.] Jeremy Slacker started the Del Fuego Surf Shop on January 1 after determining that business school classes conflicted with his preferred activity. He invested $80,000 in the shop,$84,500 of his own savings and $40,000 borrowed from an acquaintance. The loan is to be repaid in 5 years. Jeremy will pay the lender annual interest at a rate of 8 percent. Shortly after opening, Jeremy realized that he is not the best financial planner and has come to you for help. With some prodding, you are able to establish that Jeremy plans to sell only two models of surfboard, the Zuma and the Coronado, for at least the first year. Data on the boards are given as follows. Expected annual sales (units) Zuma 1,200 Coronado 600 $ Retail price (per unit) Purchase cost (per unit) 500 410 $800 550 Additional information on the planned operations for the year includes the following. 1. Equipment costing $70,000 was purchased for cash when the store opened. The equipment will be depreciated over five years using straight-line depreciation. 2. Because of the fantastic weather in Del Fuego, Jeremy expects sales to occur uniformly over the year. Sales will be both for cash (60 percent) and on account (40 percent). Sales on account are assumed to be collected in two months. 3. Jeremy will maintain inventory equal to one-half of a month's sales. All boards will be purchased from the manufacturer on credit with payment made one month after purchase. 4. Annual cash selling, general, and administrative expenses are $20,000 fixed plus 10 percent of revenues. 5. Jeremy's tax rate is 40 percent. Problem 13-63 (Algo) Budgeted Financial Statements in a Retail Firm (LO 13-6, 7) Required: a. Prepare an income statement for the year based on the data and assumptions available. b. Prepare the year-end (December 31) balance sheet based on the data and assumptions available. Required A Required B Prepare an income statement for the year based on the data and assumptions available. Del Fuego Surf Shop Budgeted Income Statement For the Year Zuma Coronado $ 600,000 $ 480,000 492,000 330,000 108,000 $ 150,000 Total $ 1,080,000 822,000 $ 258,000 Revenue Cost of sales Gross margin Less other costs: Depreciation Accounts payable Interest expense 14,000 128,000 3,200 $ Operating income Income tax Net income 112,800 45,120 67.680 $ Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare the year-end (December 31) balance sheet based on the data and assumptions available. Del Fuego Surf Shop Budgeted Balance Sheet December 31 Assets Cash $ 149,604 Accounts receivable 72,000 Inventory 34,250 $ 255,854 70,000 (14,000) 56,000 $ 311,854 Current assets Equipment Less: Accumulated depreciation Total assets Liabilities and Net Worth Accounts payable Interest expense Income tax Total liabilities Contributed capital Retained earnings $ 71,354 3,200 45,120 $ 119,674 84,500 67,680 Total net worth Total liabilities and net worth 152.180 $ 271,854