Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Lee Nicholas has been the owner and operator of World.com Advertising since its beginning 10 years ago. The company has prospered. Recently, Nicholas mentioned that

Lee Nicholas has been the owner and operator of World.com Advertising since its beginning 10 years ago. The company has prospered. Recently, Nicholas mentioned that he would sell the business for the right price.

Assume that you are interested in buying World.com Advertising. You obtain the most recent monthly trial balance, which follows. Revenues and expenses vary little from month to month, and January is a typical month. The trial balance shown is a preliminary or unadjusted trial balance. The controller informs you that the necessary accrual adjustments should include revenues of $3,800 and expenses of $1,100. Also, if you were to buy World.com Advertising, you would hire a manager so you could devote your time to other duties. Assume that this person would require a monthly salary of $5,000.

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.

image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction To Accounting An Integrated Approach

Authors: Penne Ainsworth, Dan Deines

5th Edition

0073527009, 9780073527000

More Books

Students also viewed these Accounting questions

Question

What should a small business owner do when merchandise is received?

Answered: 1 week ago

Question

Draw a labelled diagram of the Dicot stem.

Answered: 1 week ago