Income Statement & Balance Sheet Worksheet Assignment

Exercise Learning Objective: This exercise will help you learn how to organize Personal Financial Data into an Income Statement $($Income and Expenses$)$ and Balance Sheet $($Assets $-$ Liabilities $=$ Net Worth$)$

Instructions:

Using the information in the case of Lydia and Ed detailed below, compose an Income Statement and Balance Sheet. A blank income statement and balance sheet is provided for you to work with, however, you are welcome to compose your own. The goal is to organize the data and determine if there is a surplus or deficit $($income statement$)$ and calculate Ed & Lydia's net worth $($balance sheet$).$

$**$Hint$,$ remember to take any annual numbers and divide by $12$ to get monthly amounts. Personal finances are usually managed MONTHLY consistent with streams of income.

Read the following story of Ed & Lydia Goodman and then input and organize their financial data.

Ed and Lydia are married just over $10$ years and have two young children. Recently, they began to think more deeply about their personal finances and thought it would be wise to organize and budget appropriately.

Ed works as a professor at a Community College earning $$102,000$ annually. Lydia works in a local school district as an Administrative Assistant earning $$42,000$ per year. They're payroll taxes and benefits withholdings amount to about $40\%$ of their salary. They have $$25,000$ in the bank earning $1\%$ interest, they currently hold $$40,000$ in two bonds that generate $$175$ per month and about $$95$ per month on dividends in their stock portfolio, which is valued at $$25,000.$ They also have a $$150,000$ investment in a business property that earns $$1000$ per month.

They currently own their condo in Flushing with an assessed value of approximately $$450,000$ but have a mortgage payment of $$2483$ per month $($that includes maintenance charges$).$ They have about $$250,000$ left on their mortgage. They pay $$2900$ in real estate taxes annually. They own a Hyundai Santa Fe utility vehicle that they are currently financing at $$375$ per month. They car is worth about $$25,000.$ Their current balance on the car is $$10,000.$

As for other expenses, they pay $$125$ per month for electric and $$30$ for gas. Their internet and cable is $$220$ per month. They pay $$35$ per for Netflix and Disney$+$ streaming services and $$200$ per month for their cell phones. They both have gym memberships at $$39$ per month each. They spend about $$500$ per month on groceries, $$200$ per month to dine out usually twice per month with the kids. They fill up the gas thank twice per month which costs about $$90$ total per month. They spend $$1200$ per month total on day care for both children. Clothing, shoes, and other child expenses amount to about $$400$ per month. They also invest in their children's college savings plan $(529$ plan$)$ where they save $$100$ per month for each child.

They have condo insurance that costs $$100$ per month, car insurance at $$175$ per month, medical premiums for health insurance come out of their paychecks. Ed has a term life insurance policy of $$200,000$ which he pays $$39$ per month in premiums.

In creating a solid spending plan, Ed and Lydia allow for personal expenses monthly of $$200$ each that they can use to buy clothes for themselves, hang out with friends, etc.