Benjamin O'Henry has owned and operated O'Henry's Data Services since its beginning ten years ago. From all appearances, the business has prospered. In the past few years, you have become friends with O'Henry and his wife. Recently, O'Henry mentioned that he has lost his zest for the business and would consider selling it for the right price. You are interested in buying this business, and you obtain its most recent monthly unadjusted trial balance which follows:

O'Henry's Data Services Unadjusted Trial Balance November 30, 20XX
Cash……………………………… $9,700

Accounts receivable……………………… 7,900

Prepaid expenses………… 2,600

Furniture, fixtures, & equipment 151,300

Accumulated depreciation
$15,600
Accounts payable…………
3,800
Salary payable………………


Unearned service revenue
6,700
Benjamin O'Henry, capital
137,400
Benjamin O'Henry, withdrawals 2,000

Service revenue…………
14,300
Rent expense……………


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, and November is a typical month. Your investigation reveals that the unadjusted trial balance does not include the effects of monthly revenues of $2,100 and monthly expenses totaling $2,750. If you were to buy O'Henry's Data Services, you would hire a manager who would 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 ending capital. Compute this amount. Under these conditions, how much should you offer O'Henry? Give your reason.

Below you will find a detailed net income sheet for O’Henry Data Services:
Srv. Revenue - 14,300
add/(less) expense
Sal. Expense ($3400)
Util. expense ($900)
Unadj. Net income $10,000

add/(less) adjustments
rev. $2,100 ($10,000 + $2,100 = $12,100)
exp. ($2,750)
mgr. salary ($3,000)
Adj. mo. Net income $6,350

The most I would pay for the business is 20 times the monthly net income = 20 x $6350 = $127,000. (The most I will pay)
The least Benjamin O'Henry will take for his business is computed as:
Beg. Capital - $137,400
withdrawals - ($2,000)
add Unadjusted Net income $9,350 ($135,400 + $9,350 = $144,750)
Ending capital $144,750. (The least O’Henry will take)

As a result of the adjustments made, there is a difference of $17,750 dollars in the asking price and what I can offer. If I can only offer $127,000 for the business, I don’t see the offer as enough to please Mr. O’Henry. I also have to consider that I will be paying a manager $36,000 dollars a year. If Mr. O’Henry is willing to negotiate, the best I can offer is the $127,000 plus half of the difference which will total $135,875, but based on my income status, I may not be able to offer this amount.

First, the thread is over a year old. Doubt OP cares anymore.

Second, please go read the guidelines we have posted in red at the top of this forum. They explain that we don't just give people the answers to their homework, so please don't.

Finding ending capital is the same as finding ending owner's equity.
You can go through the link for very easy to understand concept or way to calculate that:

http://www.accounting7.com/content/calculate-net-incomeor-net-loss-ending-owners-equityy-and-total-assets