# HOMEWORK 2

HOMEWORK 2.

1. Calculating Balance Sheet Amounts. Based on the following data, compute the total assets, total liabilities, and net worth.
Liquid assets \$4,670                                                                  Household assets \$93,780
Investment assets 26,910                                                          Long-term liabilities 76,230
Current liabilities 2,670
2. Preparing a personal Balance Sheet. Use the following items to  prepare a balance sheet and a cash flow statement. Determine the total  assets, total liabilities, net worth, total cash inflows, and total cash  outflows.
Rent for the month, \$650
Monthly take-home salary, \$1,950
Cash in checking account, \$450
Savings account balance, \$1,890
Spending for food, \$345
Balance of educational loan, \$2,160
Current value of automobile, \$7,800
Telephone bill paid for month, \$65
Credit card balance, \$235
Loan payment, \$80
Auto insurance, \$230
Household possessions, \$3,400
Stereo equipment, \$2,350
Payment for electricity, \$90
Lunches/parking at work, \$180
Donations, \$70
Home computer, \$1,500
Value of stock investment, \$860
Clothing purchase, \$110
Restaurant spending, \$130
3. Calculating Financial Ratios. The Fram family has liabilities of  \$128,000 and a net worth of \$340,000. What is their debt ratio? How  would you assess this?
4. Determining Budget Variances. Fran Bowen created the following budget:
Food, \$350
Clothing, \$100
Transportation, \$320
Personal expenses and recreation, \$275
Housing, \$950
She  actually spent \$298 for food, \$337 for transportation, \$982 for  housing, \$134 for clothing, and \$231 for personal expenses and  recreation. Calculate the variance for each of these categories, and  indicate whether it was a deficit or surplus.
5. Future Value of Savings. Kara George received a \$4,000 gift for  graduation from her uncle. If she deposits the entire amount in an  account paying 3 percent, what will be the value of this gift in 15  years?

HOMEWORK 2

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