Pedro and Lucy started to create a budget (based on last years income and expense statement) but got stuck. They know that you have learned how to create budgets and are asking for your help. They would like you to input the correct values for the first three months of next year.

Income and Expense Statement Name(s): Pedro and Lucy McDermott For the year ending: As of December 31,20XX Dollars \begin{tabular}{lll} Income & & \\ \hline Wages and salaries & Name: Pedro McDermott & $21,000 \\ & Name: Lucy McDermott & 18,900 \\ Bonuses and commissions & Pedro's bonus & 2,100 \\ (1) Total Income: & & $42,000 \end{tabular} Expenses \begin{tabular}{|lll|} \hline Housing & & $5,400 \\ \hline Utilities & Puget Sound Energy & 600 \\ & Verizon & 300 \\ \hline Food & Groceries & 1,080 \\ Transportation & Auto loan & 4,320 \\ \hline Insurance & Public transportation & 2,400 \\ \hline Taxes & & 900 \\ \hline Fun money & & 9,975 \\ \hline Parents' loan & Cruise to Mexico & 2,500 \\ \hline (2) Total Expenses: & & 700 \\ \hline Surplus (Deficit): & & $28,175 \\ \hline \end{tabular} In addition to the statement, you will need to know the following information: - They estimated their net annual income (after taxes and employer deductions) at $15,750 for Pedro and $14,175 for Lucy - Insurance is paid at the end of each calendar quarter - Lucy purchases her commuter pass on the first of each month - The parents' loan is money they borrowed from Lucy's parents to pay off their student loans. How much they pay each month is determined by them - The fun money listed on the statement is the money spent for a cruise to Mexico. They didn't keep track of any other entertainment expenses (such as dinners out and movies) incurred during the year. Expenses Rent 450450 Utilities: Looking at the completed budget, what single item would you recommend that they add to their budget? Pensions and annuities Dividend and interest income Savings and investments This is because: The couple needs to budget for contingencies and save for future goals. The couple needs to increase their distributions from their retirement plans. The couple needs to increase their taxable income