The owner of a bicycle repair shop forecasts revenues of $168,000 a year. Variab

Question

The owner of a bicycle repair shop forecasts revenues of $168,000 a year. Variable costs will be $52,000, and rental costs for the shop are $32,000 a year. Depreciation on the repair tools will be $12,000. Prepare an income statement for the shop based on these estimates. The tax rate is 30%.

INCOME STATEMENT (Options for column A are: DEPRECIATION, PRETAX PROFIT, RENTAL COSTS, REVENUE, Choose 1 only) (Column B is for imputing the numbers)

Column A                                  Column B

1.                                               1.

2.                                               2.

3.                                               3.

4.                                               4.

5.                                               5.

6.                                               6.

7.                                               7.

Explanation / Answer

Solution:

Preparing the Income Statement for the shop based on these estimates:

INCOME STATEMENT Revenue $168,000 Rental Costs ($32,000) Variable Costs ($52,000) Depreciation ($12,000) Pretax Profit $72,000 Taxes ($72,000 * 30%) ($21,600) Net Income $50,400

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