Consider a family that has one working parent, a stay‐at‐home parent, and three children. Two of the children are in elementary school, and the youngest child is in Pre‐Kindergarten. They have a house, a car, and a minivan, and they carry some credit card debt. The house is valued at $89,000 with a mortgage balance of $80,000. The car is worth $15,000. The family owes $15,000 on this auto loan. The minivan is worth $20,000. The family owes $16,000 on this auto loan. They financed new household furnishings valued at $5,000. The family owes $4,500 on this loan. They have $15,000 in their retirement account. They have $1,500 in emergency savings, $1,000 in savings, $500 in checking, and $1,500 in a CD. They have $200 in cash. Balances on the credit cards total $15,000. The family pays $500 per month for school loans; the current balance is $25,000. The family pays $350 per month for Pre‐Kindergarten tuition. All of the children are on soccer teams, which costs $100 per month. For this assignment, use the information above to answer the following questions about the family's net worth: Calculate the family's total assets. Calculate the family's total liabilities. Calculate the family's net worth, and identify whether the net worth is positive or negative. List any expenses that would not fall on the balance she

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Consider a family that has one working parent, a stay‐at‐home parent, and three children. Two of the children are in elementary school, and the youngest child is in Pre‐Kindergarten. They have a house, a car, and a minivan, and they carry some credit card debt.

The house is valued at $89,000 with a mortgage balance of $80,000.
The car is worth $15,000. The family owes $15,000 on this auto loan.
The minivan is worth $20,000. The family owes $16,000 on this auto loan.
They financed new household furnishings valued at $5,000. The family owes $4,500 on this loan.
They have $15,000 in their retirement account.
They have $1,500 in emergency savings, $1,000 in savings, $500 in checking, and $1,500 in a CD.
They have $200 in cash.
Balances on the credit cards total $15,000.
The family pays $500 per month for school loans; the current balance is $25,000.
The family pays $350 per month for Pre‐Kindergarten tuition.
All of the children are on soccer teams, which costs $100 per month.

For this assignment, use the information above to answer the following questions about the family's net worth:

Calculate the family's total assets.
Calculate the family's total liabilities.
Calculate the family's net worth, and identify whether the net worth is positive or negative.
List any expenses that would not fall on the balance sheet.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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