2 personal finance assignments.

Financial Statements assignment: Due November 5, 2017 at 11:50 PM

***MAKE SURE THAT YOUR SUBMISSION IS NOT IN DRAFT MODE*** In chapter 2, you learned the importance of knowing your financial standing at any given time. This information will allow you to set personal financial goals. This assignment has a total of three sections with the assigned value of 50 points for the entire assignment. Below are the instructions for each section of the assignment. Although the due date is not until November, you will need to start working on the assignment well before the due date, staring on 10/1.

Section 1: Budget and Expense Tracker: USE THE MODEL BELOW ITEM “d” The budget should be completed first due to the fact that it will present information that you will

include subsequently in the other two sections. If you live on campus, divide the amount that

you are charged per semester for room and board and divide by the number of months in the

semester.

If you are living with your parents then try to estimate YOUR portion of the household expenses.

For example, if you use one bedroom of their five bedroom house then find out the monthly

mortgage payment that your parents make and divide that number by five to get the rent expense

for the room that you are using. Use similar logic for all the other expenses that they are paying

while you are living with them. I want you to get an idea of how much it cost for you to live your

life for a month.

(a) Create a budget of what you expect to spend from October 1 st

-October 31 st

. Every item should be itemized on your budget.

(b) Document every item that you purchase during this timeframe. (c) At the end of the month, calculate the variance of what you “budgeted” and “actually” spent for

this timeframe. (d) Explain how you would reconcile the budget variance. In other words, what would you do with

the difference between what you thought you were going to spend versus what you ended up spending. Would you change any of your behavior, habits or lifestyle in the future to stay within your budget?

Date Categories Budgeted Actual Variance

September Living Expenses 700 670 30

1 Rent 500

15 AT&T 100

1 Water 10

17 Electricity 60

Food 100 182.39 -82.39

15 Wal-Mart 50.03

10 Taco Cabana 15

3 Carrabbas 57.83

4 Pappasitos 32.78

5 Starbucks 4.94

6 Starbucks 4.94

7 Starbucks 4.94

8 Starbucks 6.2

9 Starbucks 5.73

Transportation 500 630.77 -130.77

23 Car payment 300

22 Insurance 125

Gas

6 Filled up 25

13 Filled up 24.97

20 Filled up 25.02

27 Filled up 15.78

15 Toll Tag 40

10 Car Wash 10

31 Registration 65

Entertainment 200 220 -20

9 Movies 20

14 South By Southwest 100

15 Hotel: South Padre

Island 100

Total 1500 1703.16 -203.16

Section 2: Balance Sheet and Income Statement: The items from your section one, should be consistent with the information that you present in this section. Therefore, you should take the information that was gathered from your budget and complete your financial statements which includes both a balance sheet and income statement. Balance Sheet: Assets – Liabilities = Net Worth. There is a possibility that as a student you may have a negative net worth. At this time in your life you more than likely have long term debt (student loans) that will be paid in full/decreased once you start working prior or post graduation. You will need to be sure that you distinguish between your current and long term debt, and assets. Use the example in Chapter 2 as a model within the “Using a Balance Sheet to Measure Your Wealth” following the “Assets: What You Own” section as a model. ***Remember that if you list your personal items, that the value is only the fair market value. If you use the category as “Other Assets” you must provide an itemized list of the assets. Housing: This item should only be listed as an asset in the event that you have a mortgage. In this case you will need to provide the fair market value. Also, it will be a liability for the remaining amount that you owe for the mortgage. If you pay rent, housing would not be considered an asset. Automobile is only an asset when you have paid the loan in full and have the title.

Income Statement: Income – Expenses (Expenditures) = amount available for savings and investing The purpose of the income statement is for you to see the inflow and outflow of your money! The benefit of this information is that it allows you to see exactly how you are spending your income. Sources of Income: Any source of income including work, financial aide REFUNDS, and family contributions. In other words, any source of money that is received should be listed for the amount for your income. Use the example in Chapter 2, titled “Simplified Income Statement” when completing this section.

DO NOT INCLUDE ANY ITEM THAT IS NOT RELEVANT TO YOU FOR THE BALANCE SHEET AND INCOME STATEMENT. MEANING THAT YOU SHOULD NOT HAVE ANY CATEGORY LISTED WITH A $0 VALUE. I WILL DEDUCT POINTS IF YOU FAIL TO FOLLOW DIRECTIONS.

Section 3: Ratios a) Using your financial statements (balance sheet and income statement) calculate the

ratios below. You MUST complete all ratios. If you are unable to complete due to not

have data, make a notation by the applicable ratio as to why you were unable to

complete.

1) Current ratio

2) Month's living expenses covered ratio (Emergency fund ratio)

3) Debt ratio

4) Long term debt ratio 5) Savings ratio

b) Tell me what you think about EACH of your ratios and what can you do to improve it.

It is very important that you follow the directions to this assignment. It is worth 50% of your total points for homework. I have taught this class several times and assigned the same assignment. I can recognize when work is done at the last minute and little effort is utilized. Not following directions will result in point deductions and possibly zero points for the assignment. I was somewhat lenient with the first assignment. That will not be the case moving forward in the semester! You have over a month to complete this assignment. It will be graded with that timeframe in mind. Once again, if you have questions let me know!