Pedro and Lucy started to create a budget (based on last year’s income and expense statement) but got stuck. They know that you have learned how to create budgets and are asking for your help. They would like you to input the correct values for the first three months of next year.

Income and Expense Statement

Name(s): Pedro and Lucy McDermott
For the year ending:	As of December 31
		Dollars
Income
Wages and salaries	Name: Pedro McDermott	$ 21,000
	Name: Lucy McDermott	18,900
Bonuses and commissions	Pedro’s bonus	2,100
(1) Total Income:		$42,000
Expenses
Housing		$5,400
Utilities	Puget Sound Energy	600
	Verizon	300
Food	Groceries	1,080
Transportation	Auto loan	3,780
	Public transportation	2,400
Insurance		900
Taxes		9,975
Fun money	Cruise to Mexico	3,500
Parents’ loan		700
(2) Total Expenses:		$28,635
Surplus (Deficit):		$13,365

In addition to the statement, you will need to know the following information:

•	They estimated their net annual income (after taxes and employer deductions) at $15,750 for Pedro and $14,175 for Lucy
•	Insurance is paid at the end of each calendar quarter
•	Lucy purchases her commuter pass on the first of each month
•	The parents’ loan is money they borrowed from Lucy’s parents to pay off their student loans. How much they pay each month is determined by them
•	The fun money listed on the statement is the money spent for a cruise to Mexico. They didn’t keep track of any other entertainment expenses (such as dinners out and movies) incurred during the year.

Three-Month Cash Budget (By Month)
Name(s): Pedro and Lucy McDermott
For: Three months		Ending: March 31
	January	February	March	Total for Three Months
Income
Pedro’s salary
Lucy’s salary
Total income
Expenses
Rent
Utilities:
Puget Sound Energy
Verizon
Food
Automobile
Public transportation
Insurance
Parents’ loan
Fun money
Total expenses
Cash surplus (deficit)
Cumulative surplus (deficit)