accounting 1 week 3 discussion

# accounting 1 week 3 discussion - expecttoearnfromit....

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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.
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