Stan and Elizabeth Carpenter are preparing their 2016 cash budget. Help the Carpenters reconcile the following differences, giving reasons to support your answers.
a. Their only source of income is Stan’s salary, which amounts to $5,000 a month before taxes. Elizabeth wants to show the $5,000 as their monthly income, whereas Stan argues that his take-home pay of $3,917 is the correct value to show.
b. Elizabeth wants to make a provision for fun money, an idea that Stan cannot understand. He asks, “Why do we need fun money when everything is provided for in the budget?”