The owner of a bicycle repair shop forecasts revenues of $228,000 a year. Variable costs will be $67,000, and rental costs for the shop are $47,000 a year. Depreciation on the repair tools will be $27,000.

a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%.

I. Depreciation:

II. Pretax Profit:

III. Rental Costs:

IV. Revenue:

V. Taxes:

VI. Variable Costs:

VII. Net Income

b. Calculate the operating cash flow for the repair shop using the three methods given below:

Now calculate the operating cash flow.

1. Dollars in minus dollars out.
2. Adjusted accounting profits.
3. Add back depreciation tax shield.