Purchase Solution

Income Statement, Owner's Equity Statement, and Balance Sheet.

Not what you're looking for?

Ask Custom Question

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.

Purchase this Solution

Solution Summary

Income Statement, Owner's Equity Statement, and Balance Sheet are examined for Benjamin O'Henry.

Purchase this Solution


Free BrainMass Quizzes
Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations