Maroney€™s Convenience Stores income statement and balance sheet reported the following.
Maroney s Convenience Stores
Income Statement
Year Ended December 31, 2009
Sales................................... $957,000
Cost of sales....................... 720,000
Gross profit........................ 237,000
Operating expenses............. 114,000
Net income......................... $123,000

The business is organized as a proprietorship, so it pays no corporate income tax. The owner is budgeting for 2010. He expects sales and cost of goods sold to increase by 6%. To meet customer demand, ending inventory will need to be $76,000 at December 31, 2010. The owner hopes to earn a net income of $154,000 next year.

Requirements
1. One of the most important decisions a manager makes is the amount of inventory to purchase. Show how to determine the amount of inventory to purchase in 2010.
2. Prepare the stores budgeted income statement for 2010 to reach the target net income of $154,000. To reach this goal, operating expenses must decrease by$16,780.

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Maroney's Convenience Stores Balance Sheet December 31, 2009 Assets Liabilities Cash.. Inventories. Land and 31,000 187,000 Total liabilitie218,000 44,000 Accounts payable. 68,000 Note payable... buildings, ne273,000 Owner, capita. Total liabilities Total assets $385000 and capital.$385,000