accounting 1 week 3 discussion

accounting 1 week 3 discussion - expecttoearnfromit....

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Assume that 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. Net income = Revenue - Expenses. In this case net income equals: $8,000 = $12,300-($3,400+$900).  Therefore the most I could pay for the business is $160,000 = $8,000 * 20. But after we make the  adjustments we end up with net income of $5,700. $5,700 * 20 = $114,000. The most we could offer is  114k. The trial balance based on net income, monthly, is $8,000 = (12,300 minus 4,300).  Twenty times the net  income is $114,000.  This would be the maximum I would pay for this business.  Nicholas states that the least he will take for the business is an amount equal to the business's owner's  equity balance on January 31. Compute this amount. Owner's Equity = Owner's Capital + Net Income – (minus) Owner's Withdrawals.  Nicholas, based on this  information from January 31, will accept no less than $109,400 for his business.
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern