The owner of a bicycle repair shop forecasts revenues of $204,000 a year. Variable costs will...

 

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The owner of a bicycle repair shop forecasts revenues of $204,000 a year. Variable costs will be $61,000, and rental costs for the shop are $41,000 a year. Depreciation on the repair tools will be $21,000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. b. Calculate the operating cash flow for the repair shop using the three methods given below: Now calculate the operating cash flow. Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield. The owner of a bicycle repair shop forecasts revenues of $204,000 a year. Variable costs will be $61,000, and rental costs for the shop are $41,000 a year. Depreciation on the repair tools will be $21,000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. b. Calculate the operating cash flow for the repair shop using the three methods given below: Now calculate the operating cash flow. Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield.

Answer rating: 100% (QA)

a Pretax profitRevenue Rental costs Variable costs De... View the full answer