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bezimeni [28]
2 years ago
10

The owner of a bicycle repair shop forecasts revenues of $160,000 a year. Variable costs will be $50,000, and rental costs for t

he shop are $30,000 a year. Depreciation on the repair tools will be $10,000. Prepare an income statement for the shop based on these estimates. The tax rate is 35%.
Business
1 answer:
Roman55 [17]2 years ago
6 0

Answer and Explanation:

The preparation of the income statement is presented below:

<u>Particulars        Amount </u>

Revenue           $160,000

Less:

Rental Costs       $30,000

Variable Costs     $50,000

Depreciation       $10,000

Profit before tax $70,000

Tax at 35%     -$24,500

Net Income     $45,500

Hence, the net income is $45,500

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From a buyer's perspective, a sale made on credit represents a liability. While a sale made on cash represents a decrease of current assets.

From a seller's perspective, a sale made on credit or cash increases current assets, but the possibility of a bad debt always exist, therefore, accounts receivables must be periodically adjusted due to bad debts.

If the seller or buyer uses accrual accounting system, the previous description holds, but if they use cash basis accounting, things change a lot. When use cash basis, transactions are recorded only when cash is exchanged, so accounts receivables do not actually increase assets (seller's perspective), and accounts payables do not increase liabilities (buyer's perspective).

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Which technique of advertising shows that multiple consumers use a product to build consumer trust in the product? indirect ad b
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Which of the following BEST represents a mission​ statement? A. Our goal is to honor and empower wounded warriors. B. We strive
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