A Personal Statement of Financial Condition Dated December 31,2008,is to Be

question 5

Essay

A personal statement of financial condition dated December 31,2008,is to be prepared for Wilhelm Holz.He provides the following information for your use in preparing the statements.All amounts are as of December 31,2008.
1)Cash on hand and in bank is $4,000.
2)Investments costing $30,000 have a market value of $78,000.
3)His personal residence cost $150,000 ten years ago,and is currently worth $320,000.
4)The payoff balance of his home mortgage is $80,000.
5)The fair value of his 401(k)retirement account is $700,000.All withdrawals from the account will be fully taxable.
6)Amounts due on credit card debt total $5,000.
7)Estimated income taxes on his calendar 2008 earnings amount to $15,000.Taxes withheld in 2008 were $14,000.
8)Assume an income tax rate of 30 percent.

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Definitions:

Interim

Refers to the financial reports that are produced for a period shorter than a fiscal year, often quarterly.

Foreign Currency Borrowing

The action of taking a loan denominated in a currency other than the domestic currency of the entity borrowing.

Interest Payments

The payments made by a borrower to a lender for the use of borrowed money, usually at a set rate and schedule.

Income Statement

A financial statement that shows a company's revenues, expenses, and profit or loss over a specific period.