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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
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