Here are condensed versions of Pontiac Convenience Store's most recent income statement and balance sheet. Income taxes are ignored.

The owner is budgeting for 2014. She expects sales and cost of goods sold to increase by 8%. To meet customer demand for the increase in sales, ending inventory will need to be $50,000 at December 31, 2014. The owner hopes to earn a net income of $160,000 next year.
Requirements
1. One of the most important decisions a manager makes is the amount of inventory to purchase. Compute the amount of inventory to purchase in 2014.
2. Prepare the store's budgeted income statement for 2014 to reach the target net income of $160,000.

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Pontiac Convenience Store Income Statement For the Year Ended December 31, 2013 Sales Cost of sales Gross profit Operating expenses Net income $900,000 700,000 200,000 80,000 $120,000 .. Pontiac Convenience Store Balance Sheet As at December 31, 2013 Assets Liabilities and Capital Cash $ 70,000 Accounts payable. 5,000 Note payable.. 280,000 315,000 150,000 Land and Total liabilities 360,000 Owner, capital $465,000 buildings, ne.. Total liabilities and capital... $465,000