Question
Please help step by step, I will rate and like 5) Lee Nicholas has been the owner and has operated Valero since its beginning 10
Please help step by step, I will rate and like 5) Lee Nicholas has been the owner and has operated Valero 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 Valero. 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 $5,000 and expenses of $2,300. Also, if you were to buy Valero, 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. VALERO Trial Balance January 31, 2015 Balance 14,100 Account Title Debit Credit Cashe $ 9,700 Accounts receivable Prepaid expenses 2,600 Building 230,300 Accumulated depreciation $ 68,600 Accounts payable 13.000 Salary payable Unearned service revenue 56,700 Nicholas, capitale 110,400 Service revenue 12,3004- Rent expense Salary expensee 3.400 Utilities expense 900 Depreciation expensee Supplies expense Total $ 261,000+ $ 261,000 Requirements 1. 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. (3 marks) 2. Nicholas states 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. (3 marks) 3. Under these conditions, how much should you offer Nicholas? Give your reason
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