Question

College Level 1 Accounting Case Question:

Using the information provided below, please solve the following:

Instructions (please note: John's 1st college term started September 1 and will last until December 15). & John's 2nd college term will start in january 1, 2019 and last till April 2019).

(a) Calculate John's personal equity (deficit) at September 1, 2018.

(b)  Calculate John's total expenses for the first term and his personal equity (deficit) at

       December 15, 2018. Assume the $200 cellphone John started with, the computer purchased,

       and damage deposit paid are assets, and that the remaining costs are expenses. Did John's

       equity change? If so, by how much?

(c) Assuming John will have the same expenses in the second term, will John have enough cash to

      pay for them? If not, How much more cash will John need?

(d) Are there any expenses that John might be able to avoid in the second college term to save cash? What are

      they? What did John overspend on in the first term?

(e)  Will it be necessary for John to ask his parents for more money for the next term? If so, how

      much will John need to ask for? Explain.

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John has saved $6,000 from your summer employment + $6000 given to John by his parents.

In addition, John has received a $9,000 student loan. All of this money is intended to last John for the academic year.

At September 1, John had $21000 in cash ($6000+$6000+$9000), and a cellphone that cost $200. John has kept all of the receipts for all of your expenditures between September 1 and December 15.

The following is a list of Cash receipts collected by John between September 1 and december 15.

Residence and meal plan fees ($1,100 per month)	$4,400
Damage deposit on residence	400
Tuition for September to December	3,500
Textbooks	600
Personal costs (personal items, entertainment, eating out)	1,500
New clothes	1,500
Cellphone costs	250
Computer	1,000
Travel to go home at Christmas	450

On December 15, John checked the balance in the bank account and John has only $7400 Cash Residence/housing for John's 2nd term in college will cost him $4400 and his tuition will cost $3500.

John is $500 in debt before purchasing textbooks or anything else he needs for his next college term.

Please understand John's situation and solve parts a) --> e). Please show your work.

Answer 1

a) John's personal equity at september 1,2018:

Savings $6000

given by parents $6000

cell phone $200

less: students loan ($9000)

$3200

b) total expenses of john for first term i.e. 1st sept to 15th dec

would be aggregate of total expenses of such term = $13600

change in equity = Saving+given by parents $ 12000

cell phone $200

computer+ damages $1400

less: other remaining expnses $12200

student loan $9000

($7400)

c) Amount of cash john will be needing more:

expenses $13600

residence cost $4400

tuition cost $3500

textbook debt $500

less: available cash

balance ($7400)

$41600

d) Computer expenses are the expenses which John can avoid in next term.