Question

Corey has a mountain bike worth $300, a credit card debt of $150, $200 in cash, a Sandy Koufax baseball card worth $400, $1,200 in a checking account, and an electric bill due for $250. a. Construct Corey's balance sheet on your own and calculate his net worth Corey's net worth: $ For parts b through d, explain how each event affects Corey's assets, liabilities, and wealth b. Corey goes to a baseball card convention and finds out that his baseball card is a worthless forgery. Instructions: Enter your responses as whole numbers Assets (Click to select,and equal $ Liabilities (Click to selecf, and equal $ Wealth (Click to select and equals $ C Corey uses $150 from his paycheck to pay off his credit card balance The remainder of his paycheck is spent in a way that does not impact his balance sheet Instructions: Enter your responses as whole numbers Assets (Click to select,and equal $ Liabilities (Cick to select and equal $ Wealth (Click to selectand equals S d. Corey writes a $150 check on his checking account to pay off his credit card balance Instructions: Enter your responses as whole numbers. Assets (Click to selectvand equal $ Liabilities (Cick to select and equal $ Wealth (Click to select and equals $ e. Of the events in the previous three parts, which, if any,. corresponds to saving on Corey's part? (Click to select)

Answer 1

Lets start above Problem with Draw a Balance Sheet position of Corey , please see below step wise analysis along with draw of Balance sheet stage wise :

	Balance Sheet
	Asset '	Amount ( $)		Liability	Amount ( $)
	Bike	300		Credit Card Debt	150
	Cash	200		Liability towards Electricity	250
	Koufex Baseball card	400
	Checking Accont	1200
	Total	2100			400
Answer a)	Net Worth ( represents Net Asset OR Equity)
	Total Asset	2100
	Total Liability	400
	Net Worth( a)	1700
Answer b)	Baseball card - Worthless so immediately drop Baseball Card Value from Balance Sheet
	Revised Balance Sheet
	Asset '	Amount ( $)		Liability	Amount ( $)
	Bike	300		Credit Card Debt	150
	Cash	200		Liability towards Electricity	250
	Checking Accont	1200
	Total	1700			400
	Asset Value reduced to /Equal	1700		( declined by $ 400)
	Liability No Change /Equal	400
	Wealth reduced / Equal to ( b)	1300
	So with help of Asset declined , We lost Capital LOSS
	Capital LOSS( a-b)	400
Answer c)	Corey used $150 from paycheck to pay off his credit card balance
	Revised Balance Sheet
	Asset '	Amount ( $)		Liability	Amount ( $)
	Bike	300
	Cash	200		Liability towards Electricity	250
	Koufex Baseball card	400
	Checking Accont	1200
	Total	2100			250
	Asset No Change /Equal	2100
	Liability reduced / Equal to	250		( reduced by $ 150)
	Wealth Increased / Equal to ( c)	1850
	So with help of above Capital Will Increase by
	Capital increase( c-a)	150
Answer d)	Corey used $150 from checking account to pay off his credit card balance
	Revised Balance Sheet
	Asset '	Amount ( $)		Liability	Amount ( $)
	Bike	300
	Cash	200		Liability towards Electricity	250
	Koufex Baseball card	400
	Checking Accont	1050
	Total	1950			250
	Asset Value Change / Equal to	1950		( $ 150 used to payoff Liability)
	Liability Change ( reduced)to	250		( reduced by $ 150)
	Net Worth No Change / Equal to	1700