The table below is Tobias and Antonia's balance sheet as of December 31, 2021. Assets Liabilities Checking
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The table below is Tobias and Antonia's balance sheet as of December 31, 2021.
Assets | Liabilities | ||
Checking account | $6,000 | Credit card balances | |
Savings account | $3,000 | American Express Card (22% interest) | $6,500 |
Cash | $500 | Master Card (20%) | $8,000 |
Market value of home | $780,000 | Car loan | $13,000 |
Market value of car (Honda) | $15,000 | Loan from Antonia's mother | $150,000 |
Furniture | $5,000 | Mortgage | $400,000 |
Computer & electronics | $8,000 | ||
Jewelry | $1,500 | ||
RRSP | $6,500 | ||
Mutual funds | $15,000 | ||
Total assets | $835,300 | Total liabilities | $563,000 |
Net Worth | $272,300 |
1. If the average spending of Tobias and Antonia is $61,200 per year, (1) compute their liquidity ratio and (2) explain if their liquidity ratio is in appropriate range.Round to two decimal places of percentage (e.g., 11.11%) (10 marks)
2. How much interest could be saved annually if Tobias and Antonia can convert credit card debt to investment loan? They can get investment loan at 6% interest. (5 marks)
Related Book For
Accounting for Governmental and Nonprofit Entities
ISBN: 978-1259917059
18th edition
Authors: Jacqueline L. Reck, James E. Rooks, Suzanne Lowensohn, Daniel Neely
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