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In: Accounting

A personal statement of financial condition dated December 31, 20X8, is to be prepared for Wilhelm...

A personal statement of financial condition dated December 31, 20X8, is to be prepared for Wilhelm Holz. He provides the following information for your use in preparing the statements. All amounts are as of December 31, 20X8.

  1. 1) Cash on hand and in bank is $4,000.
  2. 2) Investments costing $30,000 have a market value of $78,000.
  3. 3) His personal residence cost $150,000 ten years ago, and is currently worth $320,000.
  4. 4) The payoff balance of his home mortgage is $80,000.
  5. 5) The fair value of his 401(k) retirement account is $700,000. All withdrawals from the account will be fully taxable.
  6. 6) Amounts due on credit card debt total $5,000.
  7. 7) Estimated income taxes on his calendar 20X8 earnings amount to $15,000. Taxes withheld in 20X8 were $14,000.
  8. 8) Assume an income tax rate of 30 percent.

Required:
Prepare a statement of financial condition for Mr. Holz as of December 31, 20X8. Assume any gain on subsequent sale of the residence will not be tax-exempt.

Essay

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Expert Solution

Personal Financial Statement
12/31/2018
Assets Amount in Dollars (Fair Market Value)
Cash in Hand and Bank                               4,000
Investment                            78,000
Retirement Fund ( 401(k) )                          700,000
Real Estate                          320,000
With holding Tax receivable                               9,500
Total Assets                      1,111,500
Liabilities Amount in Dollars
Current Debt (Credit cards, Accounts)                               5,000
Mortgage                            80,000
Total Liabilities                            85,000
Net Worth                      1,026,500
Notes
Networth = Total Asset-Total Liabiliy
With holding tax calculation
Current year tax liability =15000*30%
=4500
Tax with held in 20X8   =14000
Final withholding =14000-4500
  =9500

Assets and liability will be considered in Fair market value

it isn’t considered an asset unless he own it.

It does not include a home or apartment he i renting or other minor and not highly valued items.

Retirement plan

Start saving early and as much as possible.

ake advantage of any and all employer-match programs. The most common of these are 401Ks. Many employers match, up to a certain amount, of employee contributions to their 401k. This is essentially free money that, if taken advantage of, will significantly increase your savings potential and retirement fund.

ekkarill92 answered 2 years ago
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