Financial Statements Project
The purpose of this assignment is to develop a financial plan for the Smith Family. Below is a socio demographic profile to give you a picture of how they live, their goals and aspirations where money is concerned. It is your job to
You are to devise a financial plan consisting of financial statements such as the income & expense statement and net worth statement. Be sure to budget in for their financial goals. Once the statements are completed you can complete the financial ratios for the Smith family to give them idea of how they compare with professional recommendations. Conclude your project with your analysis of their situation based on the results of the ratios.
points will be graded accordingly:
Income Worksheet
10
Income / Expense Worksheet
10
Net worth Statement
5
Goals Worksheet
10
Ratio Calculations
10
Final Analysis
5
Total Points:
50
Socio Demographic Profile of the Family
Matt Smith is currently 28 years old and married to wife, Melanie who is also 28. They have a six month old son and two year old daughter and plan to have more. They live in Huntington Beach, Ca in a 2 bedroom house that they rent for $2000 per month. Their home is nicely furnished with furnishings we financed from Pottery Barn, worth about $5000.
The landlord had supplied new appliances and a backyard with a BBQ. They are saving to buy a home in the next few years and anticipate needing about $35,000 as a down payment. Matt & Melanie know buying a home will bring many expenses such as new appliances (maybe down the road), and moving expenses. Once they get their own home they would love to have a backyard playground type structure for the kids (costing $1200) and possibly even a pool. They have two cars, one is a 2011 Toyota truck that is paid off and probably worth $10,000.
Melanie drives an Acura, probably worth $12,000 that they make $300 per month payments on for one more year. Matt is the Assistant
Basketball Coach and Athletic Trainer at Golden West College and Melanie is a Physical Therapist. They have good health insurance through our jobs and only pay $250 per month pre-tax to cover both the dependent children for medical and dental. They have minimal life insurance so they bought an additional 20 year term life plan that only costs $20 per month. Their combined income is close to $128,000.00 a year. (they make close to the same amount). They both still owe about
$20,000 each in student loans and each are paying $300 per month (pre- tax – government aid student loans) and once those are paid off they they will be in a better situation to really start saving for retirement. The utilities run them about $250 per month (gas, power and water is $100, and phone and cable is $150). Currently Matt & Melanie only put $100 month each into our company pension plans. Their pension plan balances are roughly at $4,000 each because they just got started with them about two years ago. They would like to have a comfortable retirement and realize they need to save more when their student loans are paid off. Their credit union savings has a current balance of $5500 (which is still not an adequate emergency fund) so they try to save an additional $300 per month. They live pretty comfortably and are not really materialistic people. They enjoy the outdoors, beach, camping, hiking, skiing and don’t really take extravagant vacations. They hope to take our children on a Disney Cruise in the next few years and are saving for that. They pay monthly for our Disney passes and enjoy taking the kids there when they can. They own a two seater kayak and 2 paddle boards and use them locally most of the time. They estimate their personal belongings to be worth about $8000. They enjoy sporting events and do save up to go to a professional game per month.
Melanie’s mom watches the kids, so they save quite a bit on child care, although we do pay her about $400.00 a month just for things she needs while taking care of them. They also budget an additional $100 for other babysitting needed for date nights! College planning is already a long term goal of theirs so they do put $100 per month away and have a balance of about $1200 in the account. They have one major credit card, with a balance of $500, and try to keep it paid off each month and only use for vacations and emergencies. They are saving saving for the kid’s
college already, by putting We are trying to learn how to not have debt and to save for what we need. We do not have any pets at the moment.
You are to use the following sheets as a guide in assembling your project. You can use any delivery method as far as Word, excel, quick books, etc. to process your assignment.
Your finished assignment should be uploaded into BeachBoard in a format that is compatible. Please do not upload any JPEG or Dox. documents.
Income Worksheet – Tax Calculation to get AGI
Filing status – Married
Income #1 – Assistant Basketball Coach/ Athletic Trainer Income $ 64,000
#2 – Physical Therapist $64, 000
Total Gross Income $ 128000
Deductions- 0
Health Benefits $ 3000
401k
#1 $ 4000
#2 $ 4000
Student Loans
#1 $ 3600
#2 $3600
Adjusted Gross Income
Exemptions
AGI
$
4 x $
$
standard deduction
$
Taxable income
CA Tax (6%)
$
$
Federal Tax (use steps shown in class to calculate the tax in each tax bracket) $
FICA $
Total Tax $
Child Tax Credit $
AGI – total tax $
(carry this amount over to budget)
Please show your work on how you calculate the Federal Tax using the bracket method I did on the board in class
Begin your Income / Expense Statement with AGI – total tax
Income / Expense Statement (Budget)
Monthly Annually
Income (AGI)
Fixed Expenses
Rent -$2000 Utilities
Gas $33
Electricit$33
Water
$33
cable
$150
phone (cell)
$150
Car Payment $300×12= 3600
life insurance $20×12= 240
car insurance
$270×12= $3240
renters insurance
$15×12= 180
Total Fixed Expenses $
Variable Expenses
Food
$1500×12= 18000
eating out
