I have no idea if i am doing this right. Please help. I have no idea where to even start with the Annual Cash Budget by Monthly.

CRITICAL THINKING CASES 2.1 The Lawrences' Version of Financial Planning Rob and Lisa Lawrence are a married couple in their mid-20s. Rob has a good start as an electrical engineer and Lisa works as a sales representative. Since their marriage four years ago, Rob and Lisa have been living comfortably. Their income has exceeded their expenses, and they have accumulated an enviable net worth. This includes $10,000 that they have built up in savings and investments. Because their income has always been more than enough for them to have the lifestyle they desire, the Lawrences have done no financial planning. Lisa has just learned that she's two months pregnant. She's concerned about how they'll make ends meet if she quits work after their child is born. Each time she and Rob discuss the matter, he tells her not to worry because \"we've always managed to pay our bills on time.\" Lisa can't understand his attitude because her income will be completely eliminated. To convince Lisa that there's no need for concern, Rob points out that their expenses last year, but for the common stock purchase, were about equal to his take-home pay. With an anticipated promotion and an expected 10 percent pay raise, his income next year should exceed this amount. Rob also points out that they can reduce luxuries (trips, recreation, and entertainment) and can always draw down their savings or sell some of their stock if they get in a bind. When Lisa asks about the long-run implications for their finances, Rob says there will be \"no problems\" because his boss has assured him that he has a bright future with the engineering firm. Rob also emphasizes that Lisa can go back to work in a few years if necessary. Despite Rob's arguments, Lisa feels that they should carefully examine their financial condition in order to do some serious planning. She has gathered the following financial information for the year ending December 31, 2015: Salaries Take-home Pay Gross Salary Rob $52,500 $76,000 Lisa 29,200 42,000 Item Food Amount $ 5,902 Clothing Mortgage payments, including property taxes of 2,300 11,028 $1,400 Travel and entertainment card balances 2,000 Gas, electric, water expenses 1,990 Household furnishings 4,500 Telephone 640 Auto loan balance 4,650 Common stock investments 7,500 Bank credit card balances Federal income taxes 675 22,472 State income tax 5,040 Social security contributions 9,027 Credit card loan payments 2,210 Cash on hand 2009 Nissan Sentra Medical expenses (unreimbursed) Homeowner's insurance premiums paid Checking account balance 85 15,000 600 1,300 485 Auto insurance premiums paid 1,600 Transportation 2,800 Cable television Estimated value of home Trip to Europe 680 185,000 5,000 Recreation and entertainment 4,000 Auto loan payments 2,150 Money market account balance 2,500 Purchase of common stock 7,500 Addition to money market account Mortgage on home 500 148,000 Critical Thinking Questions 1. Using this information and Worksheets 2.1 and 2.2, construct the Lawrences' balance sheet and income and expense statement for the year ending December 31, 2015. 2. Comment on the Lawrences' financial condition regarding (a) solvency, (b) liquidity, (c) savings, and (d) ability to pay debts promptly. If the Lawrences continue to manage their finances as described, what do you expect the long-run consequences to be? Discuss. 3. Critically evaluate the Lawrences' approach to financial planning. Point out any fallacies in Rob's arguments, and be sure to mention (a) implications for the long term, as well as (b) the potential impact of inflation in general and specifically on their net worth. What procedures should they use to get their financial house in order? Be sure to discuss the role that long- and short-term financial plans and budgets might play. ANNUAL CASH BUDGET BY MONTH Name(s) For the Ended INCOME Jan. Take-home pay Feb. $ Mar. $ April $ May $ June $ July $ Aug. $ Sep. $ Oct. $ Nov. $ Dec. $ Total for the year $ $ - Bonuses and commissions $ - Pensions and annuities $ - Investment income $ - Other income $ - $ - $ - Utilities (phone, elec., gas, water) $ - Food (home and away) $ - Transportation (auto/public) $ - Medical/dental, incl. insurance $ - Clothing $ - Insurance (life, auto, home) $ - Taxes (property) $ - Appliances, furniture, and other (purchases/loans) $ - Personal care $ - Recreation and entertainment $ - Savings and investments $ - Other expenses $ - Fun money $ - (I) Total Income $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - EXPENSES Housing (rent/mtge, repairs) $ $ $ $ $ $ $ $ $ $ $ $ (II) Total Expenses $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - CASH SURPLUS (OR DEFICIT) [(I)-(II)] $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - CUMULATIVE CASH SURPLUS (OR DEFICIT) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - INCOME AND EXPENSE STATEMENT Rob and Lisa Lawrence Year Ended Name(s) For the Income Wages and salaries $ 76,000.00 42,000.00 (I) Total Income $ Self-employment income Bonuses and commissions Investment income Name: Name: Name: Rob Lawrence Lisa Lawrence December 31, 2015 118,000.00 Interest received Dividends received Rents received Sale of securities Other Pensions and annuities Other income Expenses Housing Utilities Food Transportation Medical Clothing Insurance Taxes Appliances, furniture, and other major purchases Personal care Recreation and entertainment Rent/mortgage payment (include insurance and taxes, if applicable) Repairs, maintenance, improvements Gas, electric, water Phone Cable TV and other Groceries Dining out Auto loan payments License plates, fees, etc. Gas, oil, repairs, tires, maintenance $ Health, major medical, disability insurance (payroll deductions or not provided by employer) Doctor, dentist, hospital, medicines Clothes, shoes, and accessories Homeowner's (if not covered by mortgage payment) Life (not provided by employer) Auto Income and social security Property (if not included in mortgage) Loan payments Purchases and repairs Laundry, cosmetics, hair care Vacations Other recreation and entertainment 11,028.00 1,990.00 640.00 680.00 5,902.00 2,150.00 2,800.00 2,300.00 1,300.00 1,600.00 36,539.00 2,210.00 5,000.00 4,000.00 Other items (II) Total Expenses $ 78,139.00 CASH SURPLUS (OR DEFICIT) [(I)-(II)] $ 39,861.00 Name(s) Rob and Lisa Lawrence BALANCE SHEET Date January 23, 2016 ASSETS Liquid Assets Cash on hand In checking Savings accounts $ Money market funds and deposits LIABILITIES Current Liabilities Utilities Rent Insurance premiums Taxes Medical/dental bills 85.00 485.00 10,000.00 2,500.00 500.00 Certificates of deposit (1 yr. to maturity) Mutual funds Bank line of credit balances Other current liabilities Real estate Retirement funds, IRA Other Total Investments Real Property Primary residence Second home Other Total Real Property Personal Property Auto(s): Auto(s): Recreational vehicles Household furnishing Jewelry and artwork Other Other Total Personal Property 2,000.00 Total Current Liabilities Long-Term Liabilities $ $ $ $ Primary residence 15,000.00 mortgage Second home mortgage Real estate investment mortgage Auto loans 148,000.00 Appliance/furniture loans Home improvement loans Single-payment loans Education loans 148,000.00 15,000.00 4,500.00 $ $ 6,585.00 $ $ 189,650.00 196,235.00 185,000.00 4,650.00 Margin loans Other long-term loans Total Long-Term Liabilities (II) Total Liabilities $ 19,500.00 Net Worth [(I) - (II)] $ (165.00) (I)Total Assets $ 196,070.00 Total Liabilities and Net Worth $ 196,070.00