Condensed versions of a Shell convenience store's most recent income statement and balance sheet reported the following. The business is organized as a proprietorship, so it pays no income tax. It uses a periodic inventory system. SHELL CONVENIENCE STORE Income Statement Year Ended December 31, 20X1 SHELL CONVENIENCE STORE Balance Sheet December 31, 20X1 (Thousands) (Thousands) Assets Liabilities and Capital Sales..... $900 Cash $ 40 Accounts payable. $ 30 Cost of sales 720 Inventories 70 Note payable. 190 Gross profit 180 Land and buildings. net.... 270 Total liabilities 220 Operating expenses. 90 Owner, capital.. 160 Net income... $ 90 Total assets. $380 Total liabilities and capital.... $380 The owner is budgeting for 20X2. He expects sales and cost of sales to increase by 9%. To meet customer demand for the increase in sales, ending inventory will need to be $80 thousand at December 31, 20X2. The owner can lower operating expenses by doing some of the work himself. He hopes to earn a net income of $110 thousand next year. Required 1. A key variable the owner can control is the amount of inventory he purchases. Show how to determine the amount of purchases the owner should make in 20x2 2. Prepare the store's budgeted income statement for 20X2 to reach the target net income of $110 thousand.