In: Accounting
Hi, can you answer this question in more detail?
Subject: Hong Kong Personal Financial Planning Practice
Q5. D
Ms. X is a fresh graduate and just found a job at a bank. Her monthly salary is $15,000, with no bonus and no commission. After some calculation, she knows that she needs to save $60 per month for tax payment. She lives in Sha Tin and works in Central, so her transportation cost per working day is $31 and she spares $40 for lunch per working day. She works 22 days a month. She lives with her parents and plans to give $4,000 to them every month for housing and utilities expenses. She spends 10% of her monthly income on entertainment and 15% on clothing and cosmetics. Calculate her monthly net cash flow, please show all the steps.
Computation of Cash Inflow
Salary = $15,000
Gross Cash Inflow = $ 15,000
Computation of CAsh Outflow
Transportation Cost per working day = $31
Lunch Cost per working day = $40
Total of Transportation & Lunch per day = $71
Number of WOrking Days = 22
Expense towards transportation & Lunch per month = Expense per day * Number of working days
= $ 71 * 22 = $1,562 ------------------------(A)
Housing & Utlities Expense per month = $ 4,000 ----------------------------(B)
Entertainment expense = 10% of monthly income
= 10% * 15,000
= $1,500 -----------------------------------------(C)
Expense for Clothing & Cosmetics = 15% of monthly income
= 15%*15,000
= $ 2,250 -----------------------------------------(D)
NET CASH FLOW COMPUTATION
Net CAsh flow = Cash Inflow - Cash Outflow
= $15000 - (A)-(B)-(C)-(D)
= 15,000-1562-4000-1500-2250
= $ 5,688
The net cash flow is $ 5,688.
Note for Tax payment :
Ms. X is to save $ 60 per month for tax payment. She is not actually paying in the current month.
Hence, no cash flow arises on account of tax payment at present.