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Owen Surf Sports is an idea of two budding entrepreneurs. Their plan is to sell kiteboards from a store in the local town.

Between them, they invest $$46,000$ in capital and are in the process of applying for a bank loan, also for $$46,000.$ The

loan would be repaid in four years. The owners will also pay the bank annual interest at a rate of $6$ percent.

The owners are working on a business plan that the bank has requested. The store would sell only two models of kites

initially, the X$-1$ and the X$-2.$ Data on the kites are given as follows:

Additional information on the planned operations for the year includes the following:

Equipment costing $$56,000$ will be purchased for cash when the store opens. The equipment will be depreciated over

five years using straight$-$line depreciation.

The owners expect 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.

The owners will maintain inventory equal to one$-$half of a month's sales. All kites will be purchased from the

manufacturer on credit with payment made one month after purchase.

Annual cash selling, general, and administrative expenses are $$53,000$ fixed plus $10$ percent of revenues.

The applicable income tax rate is $20$ percent.

Required:

a$.$ Prepare a budgeted income statement for the year based on the data and assumptions available.

b$.$ Prepare the year$-$end $($December $31)$ budgeted balance sheet based on the data and assumptions available. Complete this question by entering your answers in the tabs below.

Prepare a budgeted income statement for the year based on the data and assumptions available.

$\backslash$table$[[$Owen Surf Sports$],[$Budgeted Income Statement$],[$For the Year Ended December $31],[,,,$x$-1,,$x$-2,,$Total$],[$Cost of sales,,$$,537,600,$$$,561,600,,1,099,200],[$Contributed capital,,,$504,000,,360,000,,864,000],[$Gross margin,,$$,33,600,$$$,201,600,$$$,235,200],[$Less other costs:$],[$Depreciation$,,,,,,,11,200],[$Selling$,$ general, and administrative expenses $($fixed$),,,,,,,76,520],[$Interest expense,,,,,,,$2,760],[,,,,,,,],[,,,,,,,],[,,,,,,,],[$Operating income,,,,,,$$,144,720],[$Income tax,,,,,,,$28,944],[$Net income,,,,,,$$,115,776]]$ Prepare the year$-$end $($December $31)$ budgeted balance sheet based on the data and assumptions available.

Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar.