Donna and Sherman Terrel are preparing a budget for 2003. Donna is a systems analyst with an airplane manufacturer, and Sherman is working on a master's degree in educational psychology. The Terrels do not have any children or other dependents. Donna estimates her salary will be about $39,996 in 2003; Sherman expects to work only during the summer months, doing painting and remodeling work for a building contractor. He anticipates an income from those activities of $3000 a month in June, July, and August. Sherman does have a scholarship that pays his tuition and also provides $3,600 a year of which $2400 is payable in February and $1200 is payable in October. The Terrels don't expect to have any other income in 2003.
Donna and Sherman have listed their expected total expenses in 2003 as follows:
Housing (rent) $6,600
Transportation 5100
Food (includes dining out) 8100
Utilities 3000
Payroll taxes:
Donna
12,000
Sherman
1500
Insurance:
Life - payable in May
720
Auto - payable in January
1,500
Leisure and entertainment:
Vacation in May
1,200
All others
1,800
Clothing 1,500
Others $3,900
Total Expenses $46,920
The Terrels will begin 2003 with about $1,000 in liquid assets, and they prefer not to draw this balance below $600 at any time during the year
What are the difficulties to this plan?
During the quarter break in April, Sherman's employer landed a major remodeling project and asked for Sherman's help. Sherman agreed, and he expects to earn $1,500 from the job before taxes but probably won't receive a check until early June. Discuss how this unexpected event might affect the Terrels' activities and their budget for the balance of 2003.
Can someone help me on these two questions. I can e-mail you the plan I made if it helps.
Donna and Sherman Terrel are preparing a budget for 2003. Donna is a systems analyst with an airplane manufacturer, and Sherman is working on a master's degree in educational psychology. The Terrels do not have any children or other dependents. Donna estimates her salary will be about $39,996 in 2003; Sherman expects to work only during the summer months, doing painting and remodeling work for a building contractor. He anticipates an income from those activities of $3000 a month in June, July, and August. Sherman does have a scholarship that pays his tuition and also provides $3,600 a year of which $2400 is payable in February and $1200 is payable in October. The Terrels don't expect to have any other income in 2003.
Donna and Sherman have listed their expected total expenses in 2003 as follows:
Housing (rent) $6,600
Transportation 5100
Food (includes dining out) 8100
Utilities 3000
Payroll taxes:
Donna
12,000
Sherman
1500
Insurance:
Life - payable in May
720
Auto - payable in January
1,500
Leisure and entertainment:
Vacation in May
1,200
All others
1,800
Clothing 1,500
Others $3,900
Total Expenses $46,920
The Terrels will begin 2003 with about $1,000 in liquid assets, and they prefer not to draw this balance below $600 at any time during the year.
Prepare a monthly income and expense plan for the Terrels in 2003.
On the basis of the plan you have just prepared, discuss the Terrels expected financial situation in 2003. Explain if you foresee any difficulties.
During the quarter break in April, Sherman's employer landed a major remodeling project and asked for Sherman's help. Sherman agreed, and he expects to earn $1,500 from the job before taxes but probably won't receive a check until early June. Discuss how this unexpected event might affect the Terrels' activities and their budget for the balance of 2003. It is not necessary to prepare a revised monthly income and expense plan but do refer to specific accounts and amounts (make appropriate assumptions) in your discussion
During the quarter break in April, Sherman's employer landed a major remodeling project and asked for Sherman's help. Sherman agreed, and he expects to earn $1,500 from the job before taxes but probably won't receive a check until early June. Discuss how this unexpected event might affect the Terrels' activities and their budget for the balance of 2003. It is not necessary to prepare a revised monthly income and expense plan but do refer to specific accounts and amounts (make appropriate assumptions) in your discussion.
The Terrels will begin 2010 with about $1,000 in liquid assets, and they prefer not to draw this balance below $600 at any time during the year.
Prepare a monthly income and expense plan for the Terrels in 2010.
On the basis of the plan you have just prepared, discuss the Terrels expected financial situation in 2010. Explain if you foresee any difficulties.
During the quarter break in April, Sherman's employer landed a major remodeling project and asked for Sherman's help. Sherman agreed, and he expects to earn $1,500 from the job before taxes but probably won't receive a check until early June. Discuss how this unexpected event might affect the Terrels' activities and their budget for the balance of 2010. It is not necessary to prepare a revised monthly income and expense plan but do refer to specific accounts
To prepare a monthly income and expense plan for the Terrels in 2003, you can follow these steps:
1. Determine the total monthly income:
- Donna's estimated salary: $39,996 / 12 = $3,333 per month
- Sherman's income from painting and remodeling work: $3,000 per month (June, July, August)
2. Calculate the total annual expenses:
- Sum up all the expenses listed: $46,920
3. Allocate the monthly expenses:
- Housing (rent): $6,600 / 12 = $550 per month
- Transportation: $5,100 / 12 = $425 per month
- Food (includes dining out): $8,100 / 12 = $675 per month
- Utilities: $3,000 / 12 = $250 per month
- Payroll taxes:
- Donna: $12,000 / 12 = $1,000 per month
- Sherman: $1,500 / 12 = $125 per month
- Insurance:
- Life (payable in May): $720 / 12 = $60 per month
- Auto (payable in January): $1,500 / 12 = $125 per month
- Leisure and entertainment:
- Vacation in May: $1,200 / 12 = $100 per month
- All others: $1,800 / 12 = $150 per month
- Clothing: $1,500 / 12 = $125 per month
- Others: $3,900 / 12 = $325 per month
4. Calculate the total monthly expenses: Add up all the allocated expenses.
5. Calculate the available monthly balance:
- Total monthly income minus total monthly expenses
6. Determine the starting balance and available balance for each month:
- Starting balance for January: $1,000
- Available balance for January: Starting balance minus total January expenses
- Available balance for subsequent months: Available balance from the previous month plus monthly income minus monthly expenses
By following these steps, you can create a monthly income and expense plan for the Terrels in 2003.
To discuss the Terrels' expected financial situation in 2003 and foresee any difficulties, you should compare their projected income with their projected expenses. If their total income exceeds their total expenses, they should be able to meet their financial obligations and possibly even save some money. However, it's important to ensure that their available balances are not dipping below $600, as they prefer to maintain a minimum balance.
Regarding the unexpected event in April, where Sherman's employer asks for his help in a major remodeling project, it's mentioned that he expects to earn $1,500 before taxes but won't receive the check until early June. This event could potentially affect the Terrels' activities and budget for the balance of 2003 in a few ways:
1. Delayed income: Since Sherman won't receive the check until June, they will have to adjust their budget for the period between April and June. They might need to cut back on some expenses or find alternative sources of income to cover their immediate needs during that time.
2. Revisions to spending plan: Once they receive the $1,500 in June, they can include it as additional income for that month and adjust their subsequent monthly income and expense plan accordingly.
3. Impact on available balances: Depending on the timing of expenses and income, their available balances for the months between April and June might be lower than anticipated. They need to make sure they can cover their expenses during that period without going below their preferred minimum balance.
When discussing the impact of the unexpected event on the Terrels' activities and budget, you can refer to specific accounts and amounts, assuming that they adjust their plan accordingly.