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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. This means you would have to pay the extra $5000 a month for a manager. 2. John Smith states the least he will take for the business is an amount equal to the business's stockholders' equity balance on January 31 . Remember, the stockholders' equity account includes common stock and the ending retained earnings. Compute this amount. This means you will have to prepare a statement of retained earnings from the point of view of John Smith. 3. Under these conditions, how much should you offer John Smith? 4. You must show the income statement from John Smith's perspective and an income statement from your perspective as the potential buyer. Also, to figure how much to offer John Smith, you will need to prepare the statement of retained earnings. 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. This means you would have to pay the extra $5000 a month for a manager. 2. John Smith states the least he will take for the business is an amount equal to the business's stockholders' equity balance on January 31 . Remember, the stockholders' equity account includes common stock and the ending retained earnings. Compute this amount. This means you will have to prepare a statement of retained earnings from the point of view of John Smith. 3. Under these conditions, how much should you offer John Smith? 4. You must show the income statement from John Smith's perspective and an income statement from your perspective as the potential buyer. Also, to figure how much to offer John Smith, you will need to prepare the statement of retained earnings

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