Creating a Balance Sheet based on the information below: A couple, Timmy and Jen
ID: 340643 • Letter: C
Question
Creating a Balance Sheet based on the information below:
A couple, Timmy and Jenny have come to see you regarding their financial situation. Timmy works for a consulting firm earning $80,000 per annum (take home pay of $2286.47 per fortnight after tax and other deductions). Jenny is currently a stay home mother taking care of their one-year-old child, which saves them in child care expenses of $450 per week. Before having the baby, Jenny worked as an early childhood teacher earning $45,000 per year ($1401.00 after tax and other deductions). They know that money has been tight and they have only saved $3,000 in a current account.
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Timmy and Jenny have provided the following information to you:
- The couple are currently renting a house which is costing them $450 per week.
-They have two cell phones each on $40 per month plans
- Power bills estimated to be $150 per month
- Internet and phone plan cost them $70 per month
- They spend about $150 per week on incidental expenses like clothing and entertainment
- Food costs them about $150 per week
- Timmy buses to work with his monthly bus pass costing $120 per month
- The couple also have a car that they have just bought for $15,000 with a 5-year loan at 14.75%. The car comes with costs of $287.75 per year for registration and needs two warrants of fitness per year costing $60 each
- They spend $25 per week on petrol
- The car is now worth $12,000
- In terms of debt, they have $7,000 of personal loan which they pay 151.67 per month.
- They also recently replaced some household appliances and so have hire purchase debt of $4,600 which is costing them $150 per fortnight in repayments for the next 3 years
- Both the personal and hire purchase have interest rates of 22.5%
- The value of their household items, including their hire purchase items is $15,000
- Timmy has accumulated $1750 in his Rabosaver (a type of saving account) fund account.
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Based on the above information, calculate:
1) Timmy and Jenny's Asset, Liability, and Net Worth (Balance Sheet)
Explanation / Answer
Liabilities assets
Loss is 11294.97
66170.25-54875.28 - current account -3000
2286.47*24= 54875.28 car 12000
less rent = 23400 hire pur items 15000
phone 960 saving 1750
power 1800 Total 31750
internet 840
exp 31200
bus 1440
loan int - 2212.50
petrol 1300
regn 287.75
maint 120
int p loan 1575
hp int 1035
loan 15000
personal loan 7000
hire purchases 4600
His assets is 31750 and liabilities are 26600 ( 15000+7000+4600)
hence net worth is 5150 (31750-26600)
It is presumed that personal loan , hire purchases and car instalment not yet started .
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