Question

mal 1 No Sa Heading 1 Heading 2 Tae Subtitle Subtle Em... Emphasis 3 incomestatement sis to complete the folewing questions im and Beth Buter are abort to consruct ther income and expense statement fer ending December 31, 2014. They have pur together the following infcrmation for as of December 31, 2014 Beth's Salary rear Fims Salary Interest on $47,000 $18,000 savings account Bonds of Beta Corporation 110 70 5,804 1,256 135,302 9,600 285 4,056 458 863 728 650 280 2,700 250 2,200 200 14,000 4,980 10,905 2,530 4,936 9,100 3,250 4,973 Food Personal care Primary residence mortgage Home mortgage payment Homeowners insurance Property Tax Electricity&Water Telephone Cable & Gas and auto maintenance internet magazines Clothing and other miscellianeous expense Medical expenses ost of furniture purchased with charge card on ian 1, 2014 Amount paid on 012 Toyota Corolla Auto loan payment student loan balance-Beth Student loan payments-Beth New student loan to cover tuitions and books-im Federal income taxes tate income taxes Social security and Medicare Health and disability insurance Gift and donation Family vacation Auto nsurance Contribution to emergency tund sevings contribution to retirement savings contribution to the checking account e by Dec 1, 2034 2,592 3,760 3,200 850 1200 1600 15 using the nformation provided hint some information are useless, prepare an income and expense statement for the Sutiers for the Butler's financ al conditions regarding (a) savings ratic and ibi debt service ratio year encing December 31, 2014 Comment on the

Answer 1

	Income and Expense Statement	$
1	Income
	Salaries (Jim+ Beth)	65,000
	Interests on Savings account and Bonds	180
	Total Income	65,180
2	Expense
	Food	5,804
	Personal Care	1,256
	Home mortgage Payment	9,600
	House Insurance	285
	Property tax	4,056
	Electricity & Water	458
	Telephone	863
	Cable & Internet	728
	Gas and Auto maintenance	650
	Books and Magazine	280
	Clothing and other miscellaneous	2,700
	Medical	250
	Auto loan payment	4,980
	Furniture payment	200
	Student Loan payment	2,530
	Federal Taxes	9,100
	State Income taxes	3,250
	Social Security and Medicare	4,973
	Health and disability insurance	2,592
	Auto Insurance	850
	Total Expenses	55,405
	Surplus	9,775

Savings of Jim and Beth are $ 9775 -3760 = $ 6015.

a ) Savings Ratio = Savings / Total Income = 6015 / 65180 = 9.23%.

They are able to save 9.23% of their annual income, which is a very healthy sign of their financial condition.

b) Debt service Ratio = Payments made pertaining to debt / earnings.

payments pertaining to student loan + mortgage + furniture+ auto loan = 4980+200+2530+9600 = 17,130\-

Debt service Ratio = 17130 / 65180 = 26.6%