Question

The owner of a bicycle repair shop forecasts revenues of $188,000 a year. Variable costs will be $57,000, and rental costs for the shop are $37,000 a year. Depreciation on the repair tools will be $17,000. Prepare an income statement for the shop based on these estimates. The tax rate is 40%.

                                          Income Statement

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Answer 1

Income statement is one of the financial statement of the company which shows the revenue and expenses of the company.
The expenses are reduced from revenue to calculate net profit or loss from the business
Income Statement
Sales Revenue	$188,000
Less : Variable costs	$57,000
Rental costs	$37,000
Depreciation on repair tools	$17,000
Pretax Profit	$77,000
Less : Tax @ 40%	$30,800
Net Profit	$46,200
Calculation
Pretax Profit = Sales Revenue - Expenses	188,000-57,000-37,000-17,000	77000
Taxes on income = pretax Profit*Tax Rate	77,000*40%	30800
Net profit = Pretax profit - Taxes	(77000-30800)	46200