Just after graduation, you have joined ABC Financial Advisors as a Paraplanner. Your first job is...
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Just after graduation, you have joined ABC Financial Advisors as a Paraplanner. Your first job is to prepare basic financial statements and analyse the financial situation of a client. The prepared Fact Sheet based on information provided by the client reveals the following information. The client, Ms Rae Adams, is employed as a Management Trainee at YZ Manufacturing. Her gross salary for the 2016 financial year was $72,000. In addition, the employer contributes 9.5% of her gross salary into a personal superannuation fund. Ms Adams' total tax liability in 2016 is $14,947.00. In addition, she received non-taxable rental income of $200 and tax-free interest income of $190. Ms Adams has contributed $5,200 to her personal superannuation account. She paid union fees of 1% of her gross salary and $1,080 in healthcare expenses. Ms Adams' household and entertainment expenses were $12,250 and $8,500 in 2018, respectively. Also, Ms Adams paid $15,500 against the mortgage loan and another $6,500 for a credit card loan. Ms Adams has her own home which is worth $650,000. A month ago, her contents were valued by her insurer for $150,000. Furthermore, she has a car worth $25,000 and a savings account balance of $8,000. Her accumulated superannuation balance as of the end of 2016 was $155,000. The outstanding balances on the mortgage loan and credit card were $350,000 and $10,000 respectively. Required a) Using the above financial data, prepare the following information for Ms Rae Adams: i. Personal balance sheet; (6 marks) ii. Personal cash flow statement; (10 marks) iii. Net Worth Ratio; (2 marks) iv. Quick Ratio; (2 marks) v. Savings Ratio: (2 marks) vi. Debt Service Ratio. (2 marks) b) Comment on the financial situation of the client using the completed financial statements and the ratios (approx. 300 words). (4 marks) Just after graduation, you have joined ABC Financial Advisors as a Paraplanner. Your first job is to prepare basic financial statements and analyse the financial situation of a client. The prepared Fact Sheet based on information provided by the client reveals the following information. The client, Ms Rae Adams, is employed as a Management Trainee at YZ Manufacturing. Her gross salary for the 2016 financial year was $72,000. In addition, the employer contributes 9.5% of her gross salary into a personal superannuation fund. Ms Adams' total tax liability in 2016 is $14,947.00. In addition, she received non-taxable rental income of $200 and tax-free interest income of $190. Ms Adams has contributed $5,200 to her personal superannuation account. She paid union fees of 1% of her gross salary and $1,080 in healthcare expenses. Ms Adams' household and entertainment expenses were $12,250 and $8,500 in 2018, respectively. Also, Ms Adams paid $15,500 against the mortgage loan and another $6,500 for a credit card loan. Ms Adams has her own home which is worth $650,000. A month ago, her contents were valued by her insurer for $150,000. Furthermore, she has a car worth $25,000 and a savings account balance of $8,000. Her accumulated superannuation balance as of the end of 2016 was $155,000. The outstanding balances on the mortgage loan and credit card were $350,000 and $10,000 respectively. Required a) Using the above financial data, prepare the following information for Ms Rae Adams: i. Personal balance sheet; (6 marks) ii. Personal cash flow statement; (10 marks) iii. Net Worth Ratio; (2 marks) iv. Quick Ratio; (2 marks) v. Savings Ratio: (2 marks) vi. Debt Service Ratio. (2 marks) b) Comment on the financial situation of the client using the completed financial statements and the ratios (approx. 300 words). (4 marks)
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Answer rating: 100% (QA)
a i Personal balance sheet Assets Home 650000 Contents 150000 Car 25000 Savings account 8000 Superannuation balance 155000 Total Assets 988000 Liabilities Mortgage loan 350000 Credit card loan 10000 T... View the full answer
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Auditing Cases An Interactive Learning Approach
ISBN: 9780134421827
7th Edition
Authors: Mark S Beasley, Frank A. Buckless, Steven M. Glover, Douglas F Prawitt
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