# Question: 1 Prepare a monthly income and expense plan for the

1. Prepare a monthly income and expense plan for the Terrels in 2009.
2. On the basis of the plan you have just prepared, discuss the Terrels’ expected financial situation in 2009. Explain if you foresee any difficulties.
3. During the quarter break in April Sherman’s employer landed a major remodeling project and asked for Sherman’s help. Sherman agreed, and he expects to earn \$1,800 from the job before taxes but probably won’t receive a check until early June. Discuss how this unexpected event might affect the Terrels’ activities and their budget for the balance of 2008. It is not necessary to prepare a revised monthly income and expense plan, but do refer to specific accounts and amounts (make appropriate assumptions) in your discussion.
Donna and Sherman Terrel are preparing a budget for 2009. Donna is a systems analyst with an airplane manufacturer, and Sherman is working on a master’s degree in educational psychology. The Terrels do not have any children or other dependents. Donna estimates her salary will be about \$59,000 in 2009; Sherman expects to work only during the summer months, doing painting and remodeling work for a building contractor. He anticipates an income from those activities of \$2,400 a month in June, July, and August. Sherman does have a scholarship that pays his tuition and also provides \$2,100 a year, payable in equal amounts in October and February. The Terrels don’t expect to have any other income in 2009.
Donna and Sherman have listed their expected total expenses in 2009 as follows:
Rent ................ \$10,760
Transport ............... 7,800
Food ................ 7,920
Utilities ............... 3,880
Payroll taxes Donna .......... 10,800
Payroll taxes Sherman .......... 1,200
Life Insurance ............. 600
Car Insurance .............. 2,320
Vacation ................ 4,152
Leisure other ............. 5,728
Clothing ................ 3,292
Others ................ 5,840
Total ................ \$64,292
The Terrels will begin 2009 with about \$1,200 in liquid assets, and they prefer not to draw this balance below \$600 at any time during the year.

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