Question

Brandon and Jill Bowden Case Client: Brandon (age 40) and Jill (age 43) are married with two children, Cole (age 9) and Owen (age 5). Brandon is a vice president with a health care company and Jill manages their family and household. Bowden family come to you regarding their financial goals to save for retirement, their children's college education, and transfer all assets to their children at Brandon and Jill's death. Here is the information regarding their financial activities during 2016 and attached the balance sheet as of 12/31/2015. Assuming today is 12/31/2016 Annual salary: $124,000 Cash & checking account balance: $3,000 Money market balance: $5,000 401(k) plan balance: $75,000 Contribution to 401(k) per year: $3,720, employer match is $1,860 Education savings (529 plan) balance: $15,000 Contribution to Education savings (529 plan): $2,000 High tech stock balance (intend to be used for retirement savings): $5,000 Personal residence: $400,000 Furniture, Clothing: $100,000 Auto #1 current value: $8,000 Auto #2 current value: $22,000 Credit card balance: $25,000, $7000 payment in 2016 Current auto loan balance for auto #2: $16,176, expect to reduce $4,968 in principal in the upcoming year Current mortgage balance: $342,632, expect to reduce $4,088 in principal in the upcoming year Utilities per year: $5,000 Gasoline for autos per year: $4,000 Lawn service per year: $1,500 Entertainment per year: $3,000 Vacations expenses per year: $2,500 Church donations per year: $1,000 Food expenses per year: $6,000 Auto maintenance expenses per year: $1,000 Telephone expenses per year: $2,660 Clothing expenses per year: $3,000 HO personal residence insurance per year: $4,500 Auto premium: $2,000 Life insurance premium: $1,000 Federal income taxes withheld: $24,800 State income taxes withheld: $6,200 Social security taxes: $8,420 Property tax on personal residence: $3,500 Auto loan payment per year (incl. both interest and principal): $6,083 Mortgage payment per year (incl. both interest and principal): $27,943
how to construct a balance with this information?

Answer 1

Answer :

Dear Student, first you need to identify the various ledger nature as this ledger is an Asset ledger or liability or equity and Income or expense nature.

Next step is just ploting the exp and income ledger to Profit & Loss statement

than you will ariive at net profit or loss figure.

then start putting assets and liabilit ledger balance in Balance Sheet.

Total of Assets and liability will match.

Hope this steps will help you to prepare financal statements.

If you face any problem do let us know in comment section will provide you the P&L and BS in solution.