1. Using this information and Worksheets 2.1 and 2.2, construct the Lawrences balance sheet and income and...

Question:

1. Using this information and Worksheets 2.1 and 2.2, construct the Lawrences’ and income and expense statement for the year ending December 31, 2015.

2. Comment on the Lawrences’ financial condition regarding

(a) Solvency

(b) Liquidity

(d) Ability to pay debts promptly.

If the Lawrences continue to manage their finances as described, what do you expect the long-run consequences to be? Discuss.

3. Critically evaluate the Lawrences’ approach to financial planning. Point out any fallacies in Rob’s arguments, and be sure to mention

a) Implications for the long term, as well as

b) The potential impact of inflation in general and specifically on their net worth.

What procedures should they use to get their financial house in order? Be sure to discuss the role that long- and short-term financial plans and budgets might play.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...