Amy is single and 25 years old. She graduated two years ago and has been working...

 

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Amy is single and 25 years old. She graduated two years ago and has been working full time ever since. She is having a bit of trouble getting her finances in order. She just can't seem to make ends meet and can't seem to save any money. Her employment income is $31,000 per year. She is proud of the fact that she has begun to contribute to the 401(k) retirement plan offered by her employer. After taxes, health insurance premiums, and contributions to her 401(k) plan; Amy's net pay is $1,950 per month. Amy keeps her financial records in a shoebox in a closet in her apartment. Going through her canceled checks, bank statements, credit card receipts, and so forth, she has come up with the following list: Income tax refund Apartment rent paid Utilities bills paid during the year Unpaid telephone and utility bills Value of her 2003 Honda Civic Car insurance premium paid this year Gas and other transportation expenses paid Amount spent on clothing Value of furniture Appraised value of jewelry Student loan payments made Balance of student loan unpaid Amount spent on food Amount spent on entertainment ATM withdrawals (don't know what for) Cost of skiing vacation taken Balance owed on Visa card Extra payments made on credit card this year Value of 403(b) retirement account Checking account balance Savings account balance Interest earned on savings account $500 7,200 1,800 125 6,000 600 1,200 2,400 3,500 3,500 1,200 4,500 3,000 1,800 2,400 1,000 1,450 1,000 2,500 750 1,200 60 Circle one ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE 1) Determine whether each of the above is an Asset, Liability, Income or Expense and circle the appropriate letter to the right of each one. 2) Prepare a year-end Balance Sheet and a Cash Flow Statement (Income Statement) for the year for Amy. 3) Prepare a monthly budget for her, assuming that her income and fixed expenses will not change (she is not going to move to a cheaper apartment), but that her variable expenses could change, e.g., clothing, vacation, entertainment, food, if she can learn to live within the budget you prepare for her. Try to make the budget realistic (she needs to eat) but you must make it balance, i.e., income must be greater or equal than expenses. Amy is single and 25 years old. She graduated two years ago and has been working full time ever since. She is having a bit of trouble getting her finances in order. She just can't seem to make ends meet and can't seem to save any money. Her employment income is $31,000 per year. She is proud of the fact that she has begun to contribute to the 401(k) retirement plan offered by her employer. After taxes, health insurance premiums, and contributions to her 401(k) plan; Amy's net pay is $1,950 per month. Amy keeps her financial records in a shoebox in a closet in her apartment. Going through her canceled checks, bank statements, credit card receipts, and so forth, she has come up with the following list: Income tax refund Apartment rent paid Utilities bills paid during the year Unpaid telephone and utility bills Value of her 2003 Honda Civic Car insurance premium paid this year Gas and other transportation expenses paid Amount spent on clothing Value of furniture Appraised value of jewelry Student loan payments made Balance of student loan unpaid Amount spent on food Amount spent on entertainment ATM withdrawals (don't know what for) Cost of skiing vacation taken Balance owed on Visa card Extra payments made on credit card this year Value of 403(b) retirement account Checking account balance Savings account balance Interest earned on savings account $500 7,200 1,800 125 6,000 600 1,200 2,400 3,500 3,500 1,200 4,500 3,000 1,800 2,400 1,000 1,450 1,000 2,500 750 1,200 60 Circle one ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE ALIE 1) Determine whether each of the above is an Asset, Liability, Income or Expense and circle the appropriate letter to the right of each one. 2) Prepare a year-end Balance Sheet and a Cash Flow Statement (Income Statement) for the year for Amy. 3) Prepare a monthly budget for her, assuming that her income and fixed expenses will not change (she is not going to move to a cheaper apartment), but that her variable expenses could change, e.g., clothing, vacation, entertainment, food, if she can learn to live within the budget you prepare for her. Try to make the budget realistic (she needs to eat) but you must make it balance, i.e., income must be greater or equal than expenses.

Answer rating: 100% (QA)

1 Determining Asset Liability Income and Expenses The items are ... View the full answer