The owner of a bicycle repair shop forecasts revenues of $220,000 a year. Variable costs will be $65,000, and rental costs for theshop are $45,000 a year. Depreciation on the repair tools will be $25,000.a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%.DepreciationPretax profitINCOME STATEMENT0$0b. Calculate the operating cash flow for the repair shop using the three methods given below.i. Dollars in minus dollars out.ii. Adjusted accounting profits.iii. Add back depreciation tax shield.Methods of Calculationi. Dollars in Minus Dollars Outii. Adjusted Accounting profitsiii. Add back depreciation tax shieldOperatingCash Flow

Income statement means the statement which include the sale revenue, cost of goods sold and all…

Answered: The owner of a bicycle repair shop…

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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