Problem 10-4 (Part Level Submission) The Schrodinger Science Store operates a retail store in a local shopping mall. The results of operations for the fourth quarter of 2014 are as follows: Additional information: 1.Sales are expected to increase by 10 percent and cost of sales are expected to increase by 12 percent, in each of the next two quarters. 2.80 percent of sales are collected in the quarter of sale, and 20 percent are collected in the quarter following sale. 3.The balance in accounts receivable at the end of 2014 relates to sales in the fourth quarter of 2014. 4.Inventory purchases in the fourth quarter of 2014 are $180,000. 5.The balance in accounts payable at the end of 2014 relates to purchases in the fourth quarter of 2014. 6.Inventory at the end of 2014 is $150,000. For 2015, the company plans to hold ending inventory equal to 65 percent of subsequent quarter cost of sales. 7.Selling and administrative expenses are expected to increase by $7,300 due to increases in advertising and salaries. All other expenses in this category are expected to remain constant. 8.40 percent of inventory purchases are paid in the quarter of purchase, and 60 percent are paid in the following quarter. All other expenses, including taxes, are paid in the quarter incurred. 9.Selling, general, and administrative expense includes $2,100 of depreciation related to furniture and fixtures with a book value (net of accumulated depreciation) of $50,000 at the end of 2014. 10.The tax rate is expected to remain at 40 percent. 11.The cash balance at the end of 2014 is $45,000. 12.Common stock at the end of 2014 is $72,000 and retained earnings is $135,000. 13.Asset accounts are cash, accounts receivable, inventory, and furniture and fixtures. The only liability account is accounts payable. Owner?s equity accounts are common stock and retained earnings. Prepare a budgeted income statement for the first quarter of 2015