(Learning Objective 5: Use the COGS model to make management decisions, and estimate amount of…

(Learning Objective 5: Use the COGS model to make management decisions, and estimate amount of inventory to purchase) Shorty’s Convenience Stores’ income statement for the year ended December 31, 2013, and its balance sheet as of December 31, 2013, reported the following

The business is organized as a proprietorship, so it pays no corporate income tax. The owner is budgeting for 2014. He expects sales and cost of goods sold to increase by 5%. To meet customer demand, ending inventory will need to be $86,000 at December 31, 2014. The owner hopes to earn a net income of $178,000 next year.