The owner of a bicycle repair shop forecasts revenues of $176,000 a year. Variable costs will be $54,000, and rental costs for the shop are $34,000 a year. Depreciation on the repair tools will be $14,000.
Prepare an income statement for the shop based on these estimates. The tax rate is 40%.
An income statement indicates the financial position of a company by determining the net profit or loss generated by its business and related operations during a fiscal period. If the revenues generated are greater than the expenses incurred, then it results in net income and it results in a net loss if the revenues generated are less than the expenses incurred. An income statement is prepared as per the accrual basis of accounting.
Answer and Explanation:
The income statement is prepared below:
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from Accounting 101: Financial AccountingChapter 2 / Lesson 2