Compute the possible price

Assignment Help Accounting Basics

Reference no: EM13258328

Can anyone explain this to me and help me figure it out? Idon't have a clue where to start!

Benjamin O'Henry has owned and operated O'Henry's DataServices since its beginning ten years ago. From all appearances,the business has prospered. In the past few years, you have becomefriends with O'Henry and his wife. Recently, O'Henry mentioned thathe has lost his zest for the business and would consider selling itfor the right price. You are interested in buying this business,and you obtain its most recent monthly unadjusted trial balancewhich follows:

O'Henry's Data Services Unadjusted Trial Balance November30, 20XX
Cash....................................	$9,700
Accountsreceivable...........................	7,900
Prepaidexpenses............	2,600
Furniture, fixtures, & equipment	151,300
Accumulated depreciation		$15,600
Accountspayable............		3,800
Salarypayable..................
Unearned service revenue		6,700
Benjamin O'Henry, capital		137,400
Benjamin O'Henry, withdrawals	2,000
Servicerevenue............		14,300
Rentexpense...............
Salary expense............	3,400
Utilities expense.........	900
Depreciation expense
Supplies expense......
Total.................................................	$177,800	$177,800

Revenues and expenses vary little from month to month, andNovember is a typical month. Your investigation reveals that theunadjusted trial balance does not include the effects of monthlyrevenues of $2,100 and monthly expenses totaling $2,750. If youwere to buy O'Henry's Data Services, you would hire a manager whowould require a monthly salary of $3,000.

The most you would pay for the business is 20 times the monthly net income you could expect to earn from it. Compute this possible price. The least O'Henry will take for the business is his endingcapital. Compute this amount. Under these conditions, how much should you offer O'Henry? Give your reason.

Reference no: EM13258328

Questions Cloud

Net operating income of accepting the special order : Determine the effect on the company's total net operating income of accepting the special order. Show your work.

What is the inductance per meter for the solenoid : A solenoid is wound with a single layer of insulated copper wire (of diameter 2.6 mm), What is the inductance per meter for the solenoid near its center

Describe the 4 major types of kidney stones : Describe kidney stones and what some of the symptoms associated with them are (Class). List/describe the 4 major types of kidney stones.

Case study of hillary company : Hillary Company purchased a new machine on September 1, 2007, ata cost of $96,000. The company estimated that the machine has asalvage value of $6,000. The machine is expected to be used for 70,000 working hours during its 8-year life.

Compute the possible price : The most you would pay for the business is 20 times the monthly net income you could expect to earn from it. Compute this possible price. The least O'Henry will take for the business is his endingcapital. Compute this amount. Under these condition..

How many water molecules : Let's say Julius Casar urinated in the Mediterranean Sea 2,000 years ago. Assuming that the oceans and the rest of the hydrosphere have been completely mixed over the last 2000 years, approximately how many water molecules from that historic urina..

What is the orbital radius of the asteroid belt : The asteroid belt circles the sun between the orbits of Mars and Jupiter. What is the orbital radius and speed of the asteroid belt

How would it capitalize the borrowing cost : Aftab Company limited realized itself as a social responsible company and decided to construct an employees housing society. How would it capitalize the borrowing cost?

Play important roles in maintaining a desired economic : Most economists believe the forms of economy and businesses we have created are in place to help society achieve security, obtain stable jobs, acquire basic needs, and increase people’s standard of living.

User Account

All Pages