Answer:
A. $71,200
Bi)$100,200
Bii)$100,200
Biii)$100,200
Explanation:
A. Preparation of an income statement for the shop based on thee estimates
INCOME STATEMENT
Revenues $236,000
Expenses:
Variable costs $69,000
Rental cost $49,000
Depreciation $29,000
Total Expenses $147,000
Tax profit $89,000
($236,000-$147,000)
Less Income Tax (at 20%) $17,800
(20%*$89,000)
Net Income $71,200
($89,000-$17,800)
Therefore Net Income will be $71,200
bi) Calculation for the operating cash flow by using dollars in minus dollars out method
Using this formula
Operating cash flow=Revenue-Cash expenses-Taxes
Let plug in the formula
Operating cash flow=$236,000-($69,000+$49,000)-$17,800
Operating cash flow=$236,000-$118,000-$17,800
Operating cash flow=$100,200
Therefore the operating cash flow by using dollars in minus dollars out method will be $100,200
bii) Calculation of the operating cash flow by using adjusted accounting profits,
Adjusted accounting profit=$71,200+$29,000
Adjusted accounting profits=$100,200
Therefore the operating cash flow by using adjusted accounting profits will be $100,200
biii)Calculate the operating cash flow by using after tax operating cash flow
After tax operating cash flow=[$236,000-($69,000+$49,000)]*(1-0.20)+(0.20*$29,000)
After tax operating cash flow=($236,000-$118,000)*0.80+$5,800
After tax operating cash flow=($118,000*0.80)+$5,800
After tax operating cash flow=$94,400+$5,800
After tax operating cash flow=$100,200
Therefore the operating cash flow by using after tax operating cash flow will be $100,200
