Question

1. The following table shows the items of assets, liabilities, cash inflows, and cash outflows for Ho in September.

Rent	$6500	Monthly take-home salary	$21850
Spending for food	$3450	Cash in checking account	$4500
Savings account balance	$1890	Balance of education loan	$21600
Current value of auto	$88000	Phone bill paid for month	$650
Credit card balance	$2350	Loan payment	$800
Auto insurance premium	$2300	Household possessions	$34000
Current value of video equipment	$23500	Payment for electricity	$900
Spending on Lunches/Parking at work	$1800	Donations	$1600
Current value of personal computer	$12000	Value of stock investment	$8600
Cloth purchase	$1100	Restaurant spending	$1300

1. Prepare a Personal Balance Sheet for Ho.
2. Prepare a Cash Flow Statement for Ho.
3. How will you evaluate his current financial situation?

SI Name: D: Session: 1. The following table shows the items of assets, liabilities, cash inflows, and cash outflows for Ho in September Rent S6500 Monthly take home salary S21850 Spending for food $3450 Cash in checking account $4500 Savings account balance $1890 Balance of education loan $21600 Current value of auto $88000 Phone bill paid for month $650 Credit card balance S2350 Loan payment S800 Auto insurance S2300 Household possessions S34000 Video equipment S23500 Payment for electricity 9900 Lunches Parking at work S1800 Donations $1600 Personal computer $12000 Value of stock investment 58600 Cloth purchase S 1100 Restaurant spending S1300 a. Prepare a Personal Balance Sheet for Ho. b. Prepare a Cash Flow Statement for Ho. c. How will you evaluate his current financial situation? d. If he is targeting at buying a flat in five years, which requires a down payment of $300,000, how will you setup a budget plan for him? (assuming that banks are now offering interest 6%p.a. compound monthly)

Answer 1

Balance sheet as at september
Liabilities	Amount	Assets	Amount
Capital	146290	Cash in checking account	4500
Add: profit for the year	2250	Saving account	1890
Balance of education loan	21600	Current value of auto	88000
Credit card balance	2350	Household possessions	34000
		Current value of video equipment	23500
		Current value of personal computer	12000
		Value of stock investment	8600
	1,72,490		1,72,490
	-
Cash flow statement for the September month
	(In $)
Salary inflow (A)	21850
Cash outflow:-
Rent	-6500
Spending of food	-3450
Phone bill	-650
Auto insurance premium	-2300
Payment of electricity	-900
Spending on lunches/ parking at work	-1800
Donations	-1600
Cloth purchase	-1100
Restaurant spending	-1300
Loan payment	-800
Total outflow (B)	-20400
Net cash flow (A-B)	1450

Assumption: - It is assumed that all expense and income routed through saving account only. so it has all effect.

So, financial position of Ho in good shape in sense that, it has more asset than liabilities and positive net cash flow for the month after all expenses paid.