For Bill and Linda,the Changes in Net Worth for the Year

question 23

Essay

For Bill and Linda,the changes in net worth for the year ended December 31,2012,are detailed as follows. $\begin{array}{llcc} \text { Realized increases in net worth: } & \\ \text { Salary } &\$40,000\\ \text { Interest income } &5,000\\\\ \text { Realized decreases in net worth:} &\\ \text { Income taxes} &10,000\\ \text { Interest expenses} &8,000\\ \text {Personal expenditures } &30,000 \\\\ \text { Unrealized increases in net worth: } &\\ \text { Marketable securities} &3,000\\ \text {Land } &4,000\\ \text { Residence } &2,000\\\\ \text { Unrealized decreases in net worth: } &\\ \text { Furnishings} & 2,000 \\ \text { Estimated income taxes on the differences between the estimated } &\\ \text {current amounts of liabilities and their tax bases } &8,000\\\\ \text {Net worth at the beginning of year } &80,000\\\end{array}$

Required:
Prepare a statement of changes in net worth for the year ended December 31,2012.

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Definitions:

Fixed Overhead Volume

refers to the portion of fixed overhead costs that is associated with the production volume, used in calculating efficiency and profitability.

Standard Machine-Hours

A measure used in manufacturing to allocate costs to products based on the estimated number of hours the machinery is used.

Actual Output

Actual output is the quantity of finished goods or services produced by a company in a specific period.

Overapplied

A situation in cost accounting where the allocated manufacturing overhead for a period exceeds the actual manufacturing overhead costs incurred.