Question

Paula Sanchez is trying to determine her 2015 finances. Paula’s actual 2014 finances were as follows:...

Paula Sanchez is trying to determine her 2015 finances. Paula’s actual 2014 finances were as follows:

Income: Assets:
Gross income $ 69,000 Checking account $ 1,950
Interest income 450 Savings account 8,950
Total $ 69,450 Automobile 1,800
Personal property 14,000
Expenses: Total $ 26,700
Living $ 24,500 Liabilities:
Insurance premium 350 Note to bank 4,500
Taxes 14,800 Net worth $ 22,200 ($26,700 − $4,500)
Medical 585
Investment 4,000
Total $ 44,235

Net worth = Assets − Liabilities
(worth)        (owned)   (owed)

Paula believes her gross income will double in 2015 but her interest income will decrease $150. She plans to reduce her 2015 living expenses by one-half. Paula’s insurance company wrote a letter announcing that her insurance premiums would triple in 2015. Her accountant estimates her taxes will decrease $250 and her medical costs will increase $410. Paula also hopes to cut her investments expenses by one-fourth. Paula’s accountant projects that her savings and checking accounts will each double in value. On January 2, 2015, Paula sold her automobile and began to use public transportation. Paula forecasts that her personal property will decrease by one-seventh. She has sent her bank a $375 check to reduce her bank note. Could you give Paula an updated list of her 2015 finances? If you round all the way each 2014 and 2015 asset and liability, what will be the difference in Paula’s net worth?

a. Could you give Paula an updated list of her 2015 finances?

Income: Assets:
Gross income $ Checking account $
Interest income Savings account
Total $ Personal property
Expenses: Total $
Living $ Liabilities:
Insurance premium Note to bank
Taxes Net worth $
Medical
Investment
Total $


b. If you round all the way each 2014 and 2015 asset and liability, what will be the difference in Paula’s net worth?

Total estimated difference            $

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Homework Answers

Answer #1
2015 estimate (working)
Income: Assets:
Gross income 138000 Checking account 3900
Interest income 300 Savings account 17900
Total 138300 Personal property 12000
Expenses: Total 33800
Living 12250 Liabilities:
Insurance premium 1050 Note to bank 4125
Taxes 14550 Net worth 29675
Medical 995
Investment 3000
Total 31845
b) 2014 2015
Checking account 2000 4000
Savings account 9000 20000
Automobile 2000 0
Personal property 10000 10000
Total 23000 34000 Total estimated difference = 30000-18000 = $12000
Liabilities:
Note to bank 5000 4000
Net worth 18000 30000
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