The owner of a bicycle repair shop forecasts revenues of $$220,000$ a year. Variable costs will be $$65,000,$ and rental costs for the shop 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 $20\%.$

b$.$ 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.

$\backslash$table$[[$Methods of Calculation,$\backslash$table$[[$Operating$],[$Cash Flow$]]],[$i$.$ Dollars in Minus Dollars Out,$],[$ii$.$ Adjusted Accounting profits,$],[$iii$.$ Add back depreciation tax shield,$]]$