6. Effects of Inflation. How does inflation affect interest rates, security prices, and financial planning?

2. Evaluate her balance sheet relative to the following factors: (a) solvency, (b) liquidity, and (c) equity in her dominant asset.

BALANCE SHEET
Name(s)	Ella Campbell			Date		October 22, 2017
ASSETS				LIABILITIES
Liquid Assets				Current Liabilities
Cash on hand	$	70.00		Utilities	$	90.00
In checking		180.00		Rent
Savings accounts				Insurance premiums		220.00
Money market funds and deposits		650.00		Taxes		400.00
				Medical/dental bills
Certificates of deposit (<1 yr. to maturity)				Repair bills
Total Liquid Assets			$ 900.00	Bank credit card balances
Investments				Dept. store credit card balances
Stocks	$	3,000.00		Travel and entertainment card balances
Bonds		500.00		Gas and other credit card balances		590.00
Certificates of deposit (>1 yr. to maturity)				Bank line of credit balances
Mutual funds				Other current liabilities
Real estate				Total Current Liabilities			$ 1,300.00
Retirement funds, IRA				Long-Term Liabilities
Other				Primary residence mortgage	$	52,000.00
Total Investments			$ 3,500.00
Real Property				Second home mortgage
Primary residence	$	68,000.00		Real estate investment mortgage
Second home
Other				Auto loans		3,000.00
Total Real Property			$ 68,000.00	Appliance/furniture loans		500.00
Personal Property				Home improvement loans
Auto(s):	$			Single-payment loans
Auto(s):				Education loans
Recreational vehicles				Margin loans
Household furnishing		1,050.00
Jewelry and artwork				Other long-term loans
Other		900.00		Total Long-Term Liabilities			$ 55,500.00
Other				(II) Total Liabilities			$ 56,800.00
Total Personal Property			$ 1,950.00	Net Worth [(I) - (II)]			$ 17,550.00
(I)Total Assets			$ 74,350.00	Total Liabilities and Net Worth			$ 74,350.00

3. Ivy and Jack Davis are about to construct their income and expense statement for the year ending December 31, 2017. Ivy works full time while Jack is finishing up graduate school. They have put together the following income and expense information for 2017.

Ivy' salary $47,000

Reimbursement travel expenses 1,950

Interest on:

Savings account 110

Bonds of Gamma Corporation 70

Groceries 4,150

Rent 9,600

Utilities 960

Gas and auto expenses 650

Jack's tuition, books, and supplies 3,300

Books, magazines, and periodicals 280

Clothing and other miscellaneous expenses 2,700

Cost of photographic equipment purchased with credit card 2,200

Amount paid this year on photographic equipment 1,600

Ivy's travel expenses 1,950

Purchase of a used car (cost) 9,750

Outstanding loan balance on car 7,300

Purchase of bonds in Gamma Corporation 4,900

Using the information provided, prepare an income and expense statement for Davis` for the year ending December 31, 2017.

INCOME AND EXPENSE STATEMENT
Name(s)
For the			Ended
Income
Wages and salaries	Name:			$
	Name:
	Name:
Self-employment income
Bonuses and commissions
Investment income	Interest received
	Dividends received
	Rents received
	Sale of securities
	Other
Pensions and annuities
Other income
(I) Total Income				$ -
Expenses
Housing	Rent/mortgage payment (include insurance and taxes, if applicable)			$
						Repairs, maintenance, improvements
	Utilities	Gas, electric, water
Phone
Cable TV and other
Food	Groceries
	Dining out
Transportation	Auto loan payments
	License plates, fees, etc.
	Gas, oil, repairs, tires, maintenance
Medical	Health, major medical, disability insurance (payroll deductions or not provided by employer)
						Doctor, dentist, hospital, medicines
	Clothing	Clothes, shoes, and accessories
Insurance	Homeowners (if not covered by mortgage payment)
	Life (not provided by employer)
	Auto
Taxes	Income and social security
	Property (if not included in mortgage)
Appliances, furniture, and other major purchases	Loan payments
	Purchases and repairs
Personal care	Laundry, cosmetics, hair care
Recreation and entertainment	Vacations
	Other recreation and entertainment
Other items
(II) Total Expenses				$ -
CASH SURPLUS (OR DEFICIT) [(I)-(II)]				$ -