Chapter 2 Financial Planning Exercise 3 Preparing personal balance sheet Use Wor

Question

Chapter 2
Financial Planning Exercise 3
Preparing personal balance sheet

Use Worksheet 2.1. Denise Fisher's banker has asked her to submit a personal balance sheet as of June 30, 2017, in support of an application for a $3,000 home improvement loan. She comes to you for help in preparing it. So far, she has made the following list of her assets and liabilities as of June 30, 2017:

From the data given, prepare Denise Fisher's balance sheet, dated June 30, 2017 (follow the balance sheet form shown in Worksheet 2.1). Then evaluate her balance sheet relative to the following factors: (a) solvency, (b) liquidity, and (c) equity in her dominant asset.

Solvency ratio. Enter your answer as a percentage rounded to two decimal places.
%

Liquidity ratio. Enter your answer as a percentage rounded to two decimal places.
%

Equity in her dominant asset. Enter your answer as a percentage rounded to two decimal places.
%

Cash on hand $      70 Balance in checking account 180 Balance in money market deposit account with Southwest Savings 750 Bills outstanding: Telephone $      20 Electricity 70 Charge account balance 190 Visa 180 MasterCard 220 Taxes 400 Insurance 220 1,300 Condo and property 74,000 Condo mortgage loan 51,000 Automobile: 2012 Honda Civic 12,000 Installment loan balances: Auto loans 3,000 Furniture loan 500 3,500 Personal property: Furniture 1,050 Clothing 900 1,950 Investments: U.S. government savings bonds 500 Stock of Harvester Corp. 3,000 3,500

Explanation / Answer

Income & Expense Statement Expense Amount Income Amount Groceries 4150 Nancy Salary 47000 Rent 9600 Reimbursement for Travel Expense 1950 Utilities 960 Interest Gas & Auto Expense 650 Savings Account      110 Bill's Tutions Books & Supplies 3300 Bonds of Alpha Corporation 70 180 Book Magazine & Periodicals 280 Clothing & Misc Expense 2700 Amount Paid for Photographic Instrument 1600 Nancy Travel Expense 1950 Amount Paid for Used Car 2450 Purchase of Bonds 4900 Profit 16590 Total 49130 49130

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