Free «Income and Expense Plan» Essay
To answer the second question, the Terrels will face some difficulties in the year. For instance in January the Terrels will have to borrow some cash approximately $1395 so that they can offset the debts they will have incurred and still remain with $600 as float. In May there will also be a need to borrow some cash so as to offset the reduction in liquid assets and still remain with a float balance. Apart from these two months the rest of the year will be expected to be okay.
The job that Sherman gets in the quarter break is very influential to the amount of income that will flow in especially for the remaining half of the year. The wages that were planned for during the year will certainly increase by $1500. This is likely to trigger the Terrels to increase their expenditure which may turn out to be dangerous and disastrous. Thus, they should engage more time in planning how to incorporate the increase in income to their financial plan for the rest of the year and also avoid some stressful conditions that they may experience (Jongsma, 2006). However, they should not include this in their budget until it has been paid that is in the month of June for the cases of avoiding unnecessary expenditure.
There are some assumptions that were made while preparing this income and expense plan. They include: Sherman will actually be paid during the year and that he will actually work, expenses such as clothing, utilities and others are incurred each month equally and that there are no extra expenses incurred as a result in of the April job.