Question

Creating a Balance Sheet based on the information below:

A couple, Timmy and Jenny have come to see you regarding their financial situation. Timmy works for a consulting firm earning $80,000 per annum (take home pay of $2286.47 per fortnight after tax and other deductions). Jenny is currently a stay home mother taking care of their one-year-old child, which saves them in child care expenses of $450 per week. Before having the baby, Jenny worked as an early childhood teacher earning $45,000 per year ($1401.00 after tax and other deductions). They know that money has been tight and they have only saved $3,000 in a current account.

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Timmy and Jenny have provided the following information to you:  

- The couple are currently renting a house which is costing them $450 per week.

-They have two cell phones each on $40 per month plans

- Power bills estimated to be $150 per month

- Internet and phone plan cost them $70 per month

- They spend about $150 per week on incidental expenses like clothing and entertainment

- Food costs them about $150 per week

- Timmy buses to work with his monthly bus pass costing $120 per month

- The couple also have a car that they have just bought for $15,000 with a 5-year loan at 14.75%. The car comes with costs of $287.75 per year for registration and needs two warrants of fitness per year costing $60 each

- They spend $25 per week on petrol

- The car is now worth $12,000

- In terms of debt, they have $7,000 of personal loan which they pay 151.67 per month.

- They also recently replaced some household appliances and so have hire purchase debt of $4,600 which is costing them $150 per fortnight in repayments for the next 3 years

- Both the personal and hire purchase have interest rates of 22.5%

- The value of their household items, including their hire purchase items is $15,000

- Timmy has accumulated $1750 in his Rabosaver (a type of saving account) fund account.

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Based on the above information, calculate:

1) Timmy and Jenny's Asset, Liability, and Net Worth (Balance Sheet)

Answer 1

            Liabilities                             assets

Loss is     11294.97

66170.25-54875.28    -                  current account -3000

2286.47*24= 54875.28                       car                   12000

less rent =     23400                        hire pur items        15000

phone               960                           saving                  1750

power 1800                        Total                     31750

internet              840

exp                   31200

bus                    1440

loan int -             2212.50

petrol                  1300

regn                    287.75

maint                 120

int p loan             1575

hp int                    1035

loan                                             15000

personal loan                                   7000

hire purchases                                 4600

His assets is 31750 and liabilities are 26600 ( 15000+7000+4600)

hence net worth is 5150 (31750-26600)

It is presumed that personal loan , hire purchases and car instalment not yet started .