Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN: 9780357033609
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Textbook Question
Chapter 2, Problem 2FPE
Preparing financial statements. Hugo Garcia is preparing his balance sheet and income and expense statement for the year ending December 31, 2020. He is having difficulty classifying six items and sks for your help. Which, if any, of the following transactions are assets, liabilities, income, or expense items?
- a. Hugo rents a house for $1,350 a month.
- b. On June 21, 2020 Hugo bought diamond earrings for his wife and charged them using his Visa card. The earrings cost $900, but he hasn’t yet received the bill.
- c. Hugo borrowed $3,500 from his parents last fall, but so far, he has made no payments to them.
- d. Hugo makes monthly payments of $225 on an installment loan; about half of it is interest, and the balance is repayment of principal. He has 20 payments left, totaling $4,500.
- e. Hugo paid $3,800 in taxes during the year and is due a tax refund of $650, which he hasn’t yet received.
- f. Hugo invested $2,300 in a mutual fund.
- g. Hugo’s Aunt Lydia gave him a birthday gift of $300.
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Mohammed received a housing loan of RO 50,000 from Bank Sohar, Nizwa Soug branch on 1st January, 2020. For this purpose, he and the branch manager signed a loan contract and Mr. Mohammed agreed to repay the loan in monthly installments.
From the above scenario what type of relationship that Mr. Mohammed and Bank Sohar are having? Who is having the liability and when the liability will expire? Explain in your own way.
Paula Sanchez is trying to determine her 2022 finances. Paula's actual 2021 finances were as follows:
Income:
Gross income
Assets:
$ 67,500
Interest income
450
Checking account
Savings account
$ 1,990
8,650
Total
$ 67,950
Automobile
1,950
Personal property
14,900
Expenses:
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$ 24,500
Total
Liabilities:
Insurance premium
310
Taxes
15,200
600
Note to bank
Net worth
$ 27,490
4,700
$ 22,790 ($27,490 - $4,700)
Medical
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4,400
$ 45,010
Net worth(own) = Assets - Liabilities(owe)
Paula belleves her gross income will double in 2022 but her interest Income will decrease $142. She plans
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her medical costs will increase $400. Paula also hopes to cut her Investments expenses by one-fourth.
Paula's accountant projects that her savings and checking accounts will each triple in…
Jamie Lee wants to determine if she can afford the monthly payments for all of her purchases before she completes the applica
process. Use the information below to determine her debt payment-to-income ratio.
Current Financial Situation
Assets:
Income:
Checking account
$1,900
Savings account
$7,400
Gross monthly salary
Net income
$2,850
$2,195
Emergency fund savings account
$2,900
Monthly Expenses:
IRA balance
$430
Rent obligation
$370
Car
$3,000
Utilities/Electric
$80
Liabilities:
Utilities/Water
$50
Student loan
$11,000
Utilities/Cable
$75
(Jamie is still a full-time student, so
Food
$135
no payments are required on the loan
Gas/Maintenance
$140
until after graduation)
Credit card payment
$0
Acme Home Goods (Washer/dryer
$1,650
Acme Home Goods
$41
and refrigerator)
Local Home Furnishings (Sofa
$1,750
Local Home Furnishings
$46
set)
Big Box Store (52" LED HDTV)
$1,150
Big Box Store
$29
Automobile, Education, Personal, and Installment Loans
Financial Institution or
Account Number…
Chapter 2 Solutions
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
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