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Problem $13-68$ & Problem $13-69($Algo$)($LO $13-4,5,6,8)$

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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 $$37,000$ in capital and are in the process of applying for a bank loan, also for $$37,000.$ 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 $$51,500$ 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 $$48,500$ fixed plus $10$ percent of revenues.

The applicable income tax rate is $20$ percent.

Problem $13-68($Algo$)$ Budgeted Financial Statements in a Retail Firm $($LO $13-5,6)$

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.

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Required B

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.