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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 $$34,000$ in capital and are in the process of applyIng for a bank loan, also for $$34,000.$ The

loan would be repald 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 kltes

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 $$50,000$ will be purchased for cash when the store opens. The equipment will be depreclated over

five years using stralght$-$line depreclation.

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 maintaln 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 $$47,000$ 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 avallable.

b$.$ Prepare the year$-$end $($December $31)$ budgeted balance sheet based on the data and assumptions avallable.

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