nikki1229
May 4, 2007, 08:01 PM
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.
1. First I adjust the trial balance for the under-reported expenses ($2,750) and revenues ($2,100).
This means that revenues for November was 14,300+2100 = 16,400
Expenses was the reported amounts of 3,400 and 900, plus the under-reported amount of 2,750 for a total of $7,050.
This means that pre-tax income was about 16,400-7050 = 9,350. Multiply this by 12 and you have $112,200 per year.
I would pay 20x November's income of 9350 = 187,000.
What about the $3000/monthly salary? Is this the correct way to get the net worth and ending capital? Please ADVICE I Don't THINKS GOATS WILL DO IT
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.
1. First I adjust the trial balance for the under-reported expenses ($2,750) and revenues ($2,100).
This means that revenues for November was 14,300+2100 = 16,400
Expenses was the reported amounts of 3,400 and 900, plus the under-reported amount of 2,750 for a total of $7,050.
This means that pre-tax income was about 16,400-7050 = 9,350. Multiply this by 12 and you have $112,200 per year.
I would pay 20x November's income of 9350 = 187,000.
What about the $3000/monthly salary? Is this the correct way to get the net worth and ending capital? Please ADVICE I Don't THINKS GOATS WILL DO IT