A Personal Statement of Financial Condition Dated December 31, 2008

question 30

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.
Required:
Prepare a statement of financial condition for Mr. Holz as of December 31, 2008. Assume any gain on subsequent sale of the residence will not be tax-exempt.

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Definitions:

Economic Progress

The overall growth and improvement in a nation's economy, reflected through factors like GDP growth and increased living standards.

Life-Long Learning

Life-long learning is the continuous, voluntary pursuit of knowledge for personal or professional development at any stage of life.

Communication

The process of exchanging information, ideas, or feelings through verbal or non-verbal means.

Upward Communication

The process where information flows from the lower levels of a hierarchy to the higher levels, allowing employees to convey feedback, suggestions, and grievances to management.