The results of operations for the Preston Manufacturing Company for the fourth quarter of 2020 were as follows:

Sales					$	550,000
Less variable cost of sales						330,000
Contribution margin						220,000
Less fixed production costs		$	120,000
Less fixed selling and administrative expenses			55,000			175,000
Income before taxes						45,000
Less taxes on income						18,000
Net income					$	27,000

Note: Preston Manufacturing uses the variable costing method. Thus, only variable production costs are included in inventory and cost of goods sold. Fixed production costs are charged to expense in the period incurred. The companys balance sheet as of the end of the fourth quarter of 2020 was as follows:

Assets:
	Cash		$	160,000
	Accounts receivable			220,000
	Inventory			385,000
	Total current assets			765,000
	Property, plant, and equipment			440,000
	Less accumulated depreciation			110,000
Total assets			$	1,095,000
	Liabilities and owners equity:
	Accounts payable		$	66,000
	Common stock			540,000
	Retained earnings			489,000
	Total liabilities and owners equity		$	1,095,000

Additional information:

1.		Sales and variable costs of sales are expected to increase by 12 percent in the next quarter.
2.		All sales are on credit with 60 percent collected in the quarter of sale and 40 percent collected in the following quarter.
3.		Variable cost of sales consists of 40 percent materials, 40 percent direct labor, and 20 percent variable overhead. Materials are purchased on credit. Fifty percent are paid for in the quarter of purchase, and the remaining amount is paid for in the quarter after purchase. The inventory balance is not expected to change. Also, direct labor and variable overhead costs are paid in the quarter the expenses are incurred.
4.		Fixed production costs (other than $9,000 of depreciation expense) are expected to increase by three percent. Fixed production costs requiring payment are paid in the quarter they are incurred.
5.		Fixed selling and administrative costs (other than $7,000 of depreciation expense) are expected to increase by two percent. Fixed selling and administrative costs requiring payment are paid in the quarter they are incurred.
6.		The tax rate is expected to be 20 percent. All taxes are paid in the quarter they are incurred.
7.		No purchases of property, plant, or equipment are expected in the first quarter of 2021. A.) Prepare a budgeted income statement for the first quarter of 2021. B.) Prepare a cash budget for the first quarter of 2021. C.) Prepare a budgeted balance sheet as of the end of the first quarter of 2021.