A cash-flow budget uses the same format as a cash-flow statement. It is prepared on a monthly basis and it reflects budgeted income and expenses. In addition to the cash-flow statement, Scott and Mary made a list of budget assumptions, listed for you here: Scott's income will increase by 5%, effective January 1. His bonus is generally 10% of his income in the previous year, and he receives it in January. Mary's raise will be 3%, effective January 1. Interest and dividend income will conservatively be the same in 2017 as it was in 2016 and will be received on a monthly basis. Mortgage payments will be the same in 2017 as they were in 2016. Federal income taxes are estimated at 20%, state income taxes at 6%, and social security taxes at 7.65% of wages, including Scott's bonus. Property insurance and property taxes are paid every six months, in June and December. The amount is expected to be the same in 2017 as it was in 2016. Mary will contribute $60 per week for the employee portion of their medical insurance. According to her pay schedule, April and June are five-week months. Auto insurance is paid at the end of each calendar quarter and should not be more than it was in 2016. Scott and Mary would like to purchase a new car in the next few years and will put $500 a month away specifically for that purpose. Scott and Mary don't expect the amount of variable expenses to change in 2017 except that they would like to double their charitable contributions and go on a vacation to Ireland in June. The vacation will cost $6,000. Gift purchases are made mostly around the holidays, so Scott and Mary are planning to pay half of the gift expense in December and half in January when the credit card bill comes in. Water and sewer is billed quarterly, in January, April, July, and October. The cost of heat should be spread over six months from November to April. All other variable expenses can be spread evenly every month at 2016 amounts. Use the information from their cash-flow statement (listed in the first column of the following annual budget) and their budget assumptions to fill in the missing amounts for the first six months of Scott and Mary's monthly budget for 2017. (Note: Be sure to fill in every blank space with a value. Round each answer to the nearest dollar.) Annual Budget Name: Scott and Mary Smith Cash-Flow Statement 2016 Jan. Feb. Mar. INCOME Scott's salary 57,000 Mary's salary 51,300 Scott's Bonus 5,000 Interest and 150 dividends Total Income $113,450 EXPENDITURES Fixed Expenses Mortgage 14,208 Scott's federal 12,400 income taxes Scott's state 3,720 income taxes Scott's social 4,743 security taxes Mary's federal 10,260 income taxes Mary's state 3,078 income taxes Mary's social 3,924 security taxes Property taxes 4,100 Property insurance 1,200 Medical insurance 2,400 Automobile 700 insurance and registration Savings for auto purchase Total Fixed Expenses $60,733 2017 Apr. i| 111-11111111177 4.444444444 May Jun. 11111111111111 Variable Expenses Food Entertainment 1,080 3,000 4,700 Dining out Electric 350 Water and sewer 800 Heat 1,250 Cable TV 3,000 Telephone 600 Cell phone 900 Gifts 2,000 Personal care Medical expenses Vehicle gas and maintenance Charitable 600 3,700 2,530 1,500 contributions Vacation Total Variable $26,010 Expenses Total Expenses $86,743 SURPLUS $26,707 44444 111111111 1111 111111111 1111 111111111 111 (DEFICIT) Scott and Mary have an emergency fund of $40,000. They would like to start saving for retirement, but they have not signed up for their companies' 401(k) plans. Neither company matches 401(k) contributions. What do you suggest for Scott and Mary based on their goals and the budget that they have put together? The $40,000 that the Smiths have saved for an emergency is three months of expenses. They have not, however, taken advantage of the employer 401(k) plans that are available to them. If an employer does not match contributions, it is company-sponsored retirement savings plan because the contributions to the plan are invested with invest part of their surplus in their 401(k) plans, they will save the designated amount plus another savings. advantageous to contribute to a earnings. If the Smiths of that amount because of the tax