Rudabeh, $34,$ and$$ Donovan, $31,$ want to buy their first home. Their current combined net income is $$$$70,000$ and they have two auto loans totaling $$$$29,000.$ They have saved approximately $$$$13,000$ for the purchase of their home and have total assets worth $ $59,000,$ which are mostly savings for retirement. Donovan has always been cautious about spending large amounts of$$ money, but Rudabeh really likes the idea of owning their own home although she$$ hasn't expressed her preference to Donovan. They do not have a$$ budget, but they do keep track of their$$ expenses, which amounted to $$$$56,000$ last$$ year, including taxes. They pay off all credit card bills on a monthly basis and do not have any other debt or loans outstanding. Other than$$ that, they do not spend a great deal of time tracking their finances.

a$.$ What financial statements should Rudabeh and Donovan prepare to begin realizing their home purchase$$ goal? What records should they use to compile these$$ statements?

b$.$ Calculate their net worth and income surplus. How does their net worth compare to that of other individuals younger than$35?$

c$.$ Calculate and interpret their$$ month's living expenses covered ratio and their debt ratio.

d$.$ What other information would be necessary or helpful to develop more complete$$ statements?

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Part $1$

a$.$ What financial statements should Rudabeh and Donovan prepare to begin realizing their home purchase$$ goal? $($Select the best answer$$ below.$)$

A$.$

They should prepare an income$$ statement, a balance$$ sheet, and a net worth statement.

B$.$

They should prepare an income statement. Since they keep track of their$$ expenses, they do not need a balance sheet.

C$.$

They should prepare a balance sheet. Since they know what their net income$$ is$,$ they do not need an income statement.

D$.$

They should prepare an income statement and a balance sheet.

What records should they use to compile these$$ statements?$($Select all that$$ apply.$)$

A$.$

$$Short$-$term debt payments

B$.$

Paycheck stub

C$.$

Fixed living expenses

D$.$

$401($k$)$ statement

E$.$

Any outstanding I.O$.$U$.$s

F$.$

$$Long$-$term debt payments

G$.$

Variable living expenses

b$.$ Rudabeh and$$ Donovan's net worth is $$$enter your response here. $($Round to the nearest$$ dollar.$)$

Rudabeh and$$ Donovan's surplus income is $$$enter your response here. $($Round to the nearest$$ dollar.$)$

Compared to others their$$ age, Rudabeh and$$ Donovan's net worth$$ is:$($Select the best answer$$ below.$)$

A$.$

above both the average and median net worth.

B$.$

below both the average and median net worth.

C$.$

above the median net$$ worth, but below the average net worth.

D$.$

above the average net$$ worth, but below the median net worth.

c$.$ Rudabeh and$$ Donovan's months living expense covered ratio is enter your response here. $($Round to two decimal$$ places.$)$

Rudabeh and$$ Donovan's debt ratio is enter your response here$\%.($Enter as a percent rounded to two decimal$$ places.$)$

d$.$ What other information would be necessary or helpful to develop more complete$$ statements?$($Select all that$$ apply.$)$

A$.$

Birth certificates

B$.$

Accurate and recent financial statements

C$.$

Past records

D$.$

College transcripts

E$.$

A list of personal and financial goals for both Rudabeh and Donovan

$)($Select all that apply.$))$b$.$Rudabeh and Donovan's net worth is $$($Round to the nearest dollar.$)$Rudabeh and Donovan's surplus income is $$($Round to the nearest dollar.$)($Select the best answer below.$))$c$.$Rudabeh and Donovan's months living expense covered ratio is$($Round to two decimal places.$)$Rudabeh and Donovan's debt ratio is$($Enter as a percent rounded to two decimal places.$)($Select all that apply.$))$