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STATEMENT OF FINANCIAL POSITION

Ike and Rhonda Sumrall

Balance Sheet

As of December 31 last year

ASSETS		LIABILITIES & NET WORTH
Cash and cash equivalents		Liabilities
Cash	500	Credit Card balance VISA	9,000
Savings Account	11,000	Credit Card balance M/C	0
Total Cash and Equivalents	11,500	Student Loan-Ike	45,061
		Auto Loan-Rhonda	14,796
Invested Assets		Furniture Loan	1,533
Fed. Exp. Stock (100 Shares)	5,000	Total Liabilities	70,390
K&B Stock (100 Shares)	7,200
Growth Mutual Fund	13,900
401(k) Account	1,500	Net Worth	9,954
Total Invested Assets	27,600
Use Assets
Auto-Rhonda	18,494
Truck-Ike	4,000
Motorcycle- Rhonda	1,000
Personal Property & Furniture	17,750
Total Use Assets	$ 41,244		.
Total Assets	$ 80,344	Total Liabilities & Net Worth	$ 80,344

STATEMENT OF CASH FLOWS

Ike and Rhonda Sumrall

Statement of Cash Flows (Expected to be similar this year)

January 1 December 31 last year

CASH INFLOWS
Salaries
Ike Salary	96,000
Rhonda Salary	26,000
Investment Income*	1,090
Total Inflows		$ 123,090
CASH OUTFLOWS
Savings House down payment	4,800
Reinvestment of Investment Income	1,090
401(k) Contribution	2,880
Total Savings		$ 8,770
FIXED OUTFLOWS
Child Support	11,100
Life Insurance Payment (To Trustee)	2,100
Rent	24,000
Renters Insurance	480
Utilities	2,720
Telephone	2,360
Auto Payment P&I	3,600
Auto Insurance	3,300
Gas, Oil, Maintenance	2,400
Student Loans	3,600
Credit Card Debt	1,800
Furniture payments	1,302
Total Fixed Outflows		$ 58,762
VARIABLE OUTFLOWS
Taxes-Ike FICA	7,344
Taxes-Rhonda FICA	1,989
Taxes-Federal Tax Withheld	20,316
Food	3,600
Clothing	3,000
Entertainment/Vacation	18,500
Total Variable Outflows		54,749
Total Cash Outflows		122,281
Discretionary Cash Flows (negative)		809
TOTAL CASH OUTFLOWS		$ 123,090

* $340 from dividends and $750 from other investment sources.

Please answer questions

1. After reading the case, what additional information would you request from the Sumralls to complete your data-gathering phase?

2. Calculate the following financial ratios for the Sumralls.

Calculation		Good or Bad?
	Liquid Assets Monthly Expenses
	Liquid Assets Current Debt Payments
	Net Worth Total Assets
	Total Debt Total Assets
	Total Debt Annual Gross Income*
	Annual Housing & Debt Payments Annual Gross Income
	Annual Housing Costs Annual Gross Income
	Investment Assets Annual Gross Income
	Annual Savings Annual Gross Income

* Annual Total Income used in text is the same as gross income.

Other Comments:

3. Comment on any of the above ratios that you think are important.

Answer & Explanation Solved by verified expert

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