Critical Thinking Questions

Using this information and Worksheets $2\mathrm{.}1$ and $2\mathrm{.}2,$ construct the

Webb's balance sheet and income and expense statement for the

year ending December $31,2020.$

Comment on the Webb's financial condition regarding $($a$)$

solvency, $($b$)$ liquidity, $($c$)$ savings, and $($d$)$ ability to pay debts

promptly. If the Webbs continue to manage their finances as

described, what do you expect the long$-$run consequences to be$?$

Discuss.

Critically evaluate the Webb's approach to financial planning. Point

out any fallacies in Ashton's observations, 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.

Salaries

Take$-$Home Pay

Gross Salary

Ashton

$$52,500$

$$76,000$

Melody

$29,200$

$42,000$