Revenues and expenses vary little from month to month

Reference no: EM13615034

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 monthl ynet income you could expect to earn from it. Compute this possibleprice. 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: EM13615034

Questions Cloud

A explain why the bump from your viewpoint behind the car : while driving behind a car traveling at 3.55 ms you notice that one of the cars tires has a small hemispherical bump on

A sample of 10 observations is selected from a normal : a sample of 10 observations is selected from a normal population for which the population standard deviation is known

At which point in the travel of the mass is the kinetic : a mass is hanging from a spring. consider this position the zero point. it is in equilibrium at this position. by

Wertheim12 found that self-esteem was one of the important : although there are many treatments for bulimia nervosa some subjects fail to benefit from treatment. in a study to

Revenues and expenses vary little from month to month : benjamin ohenry has owned and operated ohenrys dataservices since its beginning ten years ago. from all appearancesthe

List three measures one can take to increase the power of : list three measures one can take to increase the power of an experiment. explain why your measures result in greater

A component with a 34 ohm resistor is rated for use at : a component with a 34 ohm resistor is rated for use at power levels not exceeding 2059 mw. how much current can safely

An outside supplier has offered to provide part x at a : mcgraw company uses5000 units of part x each year as a component in the assembly ofone of its products. the company is

One family is picked at random from all of the families in : in a certain town 10 of the families have no children 10 have one child 40 have two children 30 have three children and

User Account

All Pages