The owner of a bicycle repair shop forecasts revenues of $192,000 a year. Variable costs will be $58,000, and rental costs for the shop are $38,000 a year. Depreciation on the repair tools will be $18,000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. INCOME STATEMENT $ i. Dollars in minus dollars out. ii. Adjusted accounting profits. iii. Add back depreciation tax shield. 0 b. Calculate the operating cash flow for the repair shop using the three methods given below: Now calculate the operating cash flow. Methods of Calculation i. Dollars in Minus Dollars Out ii. Adjusted Accounting profits iii. After tax Operating Cash flow 0 Operating Cash Flow

The owner of a bicycle repair shop forecasts revenues of $192,000 a year. Variable costs will be $58,000, and rental costs for the shop are $38,000 a year. Depreciation on the repair tools will be $18,000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. INCOME STATEMENT $ i. Dollars in minus dollars out. ii. Adjusted accounting profits. iii. Add back depreciation tax shield. 0 b. Calculate the operating cash flow for the repair shop using the three methods given below: Now calculate the operating cash flow. Methods of Calculation i. Dollars in Minus Dollars Out ii. Adjusted Accounting profits iii. After tax Operating Cash flow 0 Operating Cash Flow

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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