Sarah Lin owns a business. She decides to sell the business and offers it to you for $50 000 cash. You will own all the assets and liabilities. Lin provides the following information: Assets Debit Credit Cash $4 000 Accounts Receivable 3 500 Supplies 3 000 Equipment 50 000 Accumulated Depreciation-Equipment Delivery Van Accumulated Depreciation-Van $24 400 38 000 24 966 Liabilities Accounts Payable Bank Loan (1 year) 5 000 12 000 Sarah states the business is worth more than $50 000 since the car and equipment cost a total of $88 000. a. What is the owner's equity in this business? Show your work. b. What is the book value of the van and equipment? Show your workark. c. What do you think is a fair selling price based only on the figures provided? What two other pieces of information would you like to see to help you determine a fair selling price? d
Sarah Lin owns a business. She decides to sell the business and offers it to you for $50 000 cash. You will own all the assets and liabilities. Lin provides the following information: Assets Debit Credit Cash $4 000 Accounts Receivable 3 500 Supplies 3 000 Equipment 50 000 Accumulated Depreciation-Equipment Delivery Van Accumulated Depreciation-Van $24 400 38 000 24 966 Liabilities Accounts Payable Bank Loan (1 year) 5 000 12 000 Sarah states the business is worth more than $50 000 since the car and equipment cost a total of $88 000. a. What is the owner's equity in this business? Show your work. b. What is the book value of the van and equipment? Show your workark. c. What do you think is a fair selling price based only on the figures provided? What two other pieces of information would you like to see to help you determine a fair selling price? d
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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