In this lesson you will practice creating a balance sheet and cash flow statement. You will apply this experience to your own financial statements.
Your balance sheet should look similar to the one found on page 74 of your textbook (Table 3-2). Your cash flow statement should look similar to the one found on page 77 (Table 3-3) of your textbook. For the balance sheet you should have between 3-4 columns, for the cash flow statement, you should have 3 columns.
**Hint: The far right column on each sheet is a percentage. Did you figure out where are they getting that percentage from?
On the balance sheet, your total assets represents the 100% baseline, so (look on page 74) the total assets were $372, 620→ $372,620/$372,620= 100%. Now we take each individual asset and divide it by $372,620. For instance, cash on hand was 260→ 260/372,620= 0.0006977, move the decimal place twice (because in order to find a percent we need to multiply the number by 100) and that gives you 0.07%; cash on hand represents 0.07% of the total assets.
This also applies to the liabilities on the balance sheet. All of the individual liabilities are divided by the total liabilities ($372,620). For instance, the dentist bill due was 120→ 120/372,620 is 0.000322, move the decimal place twice and you have 0.03%; the dentist bill represents 0.03% of the total liabilities.
Now for the cash flow statement. It is just like the balance sheet in that we are going to use a number as our baseline. In the income section, it is the total income that represents our 100%. See page 77 (Table 3-3); all of our individual income figures are going to be divided by the total income. For instance, total income is $89,000: Victor’s gross salary is 63,180→ 63,180/89,000= 0.70988, move the decimal places twice and Victor’s gross salary represents 70.99% of the total income.
In the expenditures section, the total expenses represents our 100% baseline. All of the individual expenditures will be divided by the total expenses figure. In this case, the total expenses is $89,000. The food expense in this statement is 4,900→ 4,900/89,000= 0.05505, move the decimal place twice and the food expense represents 5.51% of the total expenses.
**Complete problem 5 below which is taken from the Do the Math exercises on page 97 of your textbook. Create a balance sheet by using tables in Word or by using an Excel spreadsheet.
Construct Financial Statements. Thomas Green has been a retail salesclerk for six years. At age 35, he is divorced with one child, Amanda, age 7. Thomas’s salary is $36,000 per year. He regularly receives $400 per month for child support from Amanda’s mother. Thomas invests $100 each month ($50 in his mutual fund and $50 in U.S. savings bonds). Using the following information, construct a balance sheet and a cash-flow statement for Thomas.
|Vested retirement benefits (no employee contribution)||$3,000|
|Money market account (includes $150 of interest earned last year)||5,000|
|Mutual fund (includes $200 of reinvested dividend income from last year)||4,000|
|U.S. savings bonds||3,000|
|Dental bill (pays $25 per month and is included in uninsured medical/dental)||$ 450|
|Visa (pays $100 per month)||1,500|
|Student loan (pays $100 per month)||7,500|
|Gas, maintenance, license||2,120|
For additional assistance completing this week’s assignment, review the following study guide: Week 2 Study Guide.
Garman, E. T., & Forgue, R. E. (2015). Personal Finance (12th ed.).Mason, OH: Cengage Learning.
We value our customers and so we ensure that what we do is 100% original..
With us you are guaranteed of quality work done by our qualified experts.Your information and everything that you do with us is kept completely confidential.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
The Product ordered is guaranteed to be original. Orders are checked by the most advanced anti-plagiarism software in the market to assure that the Product is 100% original. The Company has a zero tolerance policy for plagiarism.Read more
The Free Revision policy is a courtesy service that the Company provides to help ensure Customer’s total satisfaction with the completed Order. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.Read more
The Company is committed to protect the privacy of the Customer and it will never resell or share any of Customer’s personal information, including credit card data, with any third party. All the online transactions are processed through the secure and reliable online payment systems.Read more
By placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.Read more