Required informationSkip to question$[$The following information applies to the questions displayed below.$]$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 $$32,000$ in capital and are in the process of applying for a bank loan, also for $$32,000.$ 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: X$-1$X$-2$Expected annual sales $($units$)420150$Retail price $($per unit$)$$ $820$$ $1,420$Purchase cost $($per unit$)6201,000$Additional information on the planned operations for the year includes the following:Equipment costing $$49,000$ will be purchased for cash when the store opens. The equipment will be depreciated over five years using straight$-$line depreciation.The owners expect sales to occur uniformly over the year. Sales will be both for cash $(60$ percent$)$ and on account $(40$ percent$).$ Sales on account are assumed to be collected in two months.The owners will maintain inventory equal to one$-$half of a months sales. All kites will be purchased from the manufacturer on credit with payment made one month after purchase.Annual cash selling, general, and administrative expenses are $$46,000$ fixed plus $10$ percent of revenues.The applicable income tax rate is $20$ percent.Required:Prepare a budgeted income statement for the year based on the data and assumptions available.Prepare the year$-$end $($December $31)$ budgeted balance sheet based on the data and assumptions available.