Balance sheet - Net worth and interpreting the data

The following is a partial balance sheet for Andy and Kim Garza. Complete the balance sheet by determining their total assets, total current liabilities, long-term liabilities, and net worth.

Balance Sheet
Name(s): Andy and Kim Garza
Date: December 31, 2012
Assets			Liabilities and Net Worth
Liquid Assets			Current Liabilities
Cash	$246.45		Electric	$437.93
Checking	271.10		Water	187.68
Savings	308.06		Insurance premiums	312.81
Total Liquid Assets:		$825.61	Taxes	1,087.50
			Mortgage	805.56
Investments			Auto	938.42
Retirement funds, IRA	$1,314.38		MasterCard	813.29
Total Investments:		$1,314.38	Total Current Liabilities:		$4,577.190
Real Property			Long-Term Liabilities
Primary residence	$156,600.00		Primary residence mortgage	$38,666.88
Total Real Property:		$156,600.00	Total Long-Term Liabilities:		$38,666.880
Personal Property
Honda Pilot	$11,742.50
Total Personal Property:		$11,742.50
				(2) Total Liabilities:	$43,244.070
	(1) Total Assets:	$170,482.490		Net Worth (1) – (2):	$127,238.420
				Total Liabilities and Net Worth:	$170,482.490

Points:

0.5 / 1

Based on the completed balance sheet, the Garzas’ net worth is 

$127,238.420

.

Garzas’ Net Worth	=	Total Assets – (Current Liabilities + Long-Term Liabilities)
	=	$170,482.49 – ($4,583.19 + $38,666.88)
	=	$127,232.42

It isn’t just the preparation of a balance sheet but the interpretation of the data that can reveal a family’s financial condition. Andy and Kim Garza are both age 44. Using data from the 2012 Federal Reserve Bulletin (shown) and the Garzas’ balance sheet, what conclusions can you draw?

  

Source: Jessie Bricker et al., “Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances,” Federal Reserve Bulletin 98, no. 2 (June 2012): 17, http://www.federalreserve.gov/pubs/Bulletin/2012/articles/scf/scf.htm.

With their balance sheet in place, Andy and Kim can compare their total liabilities to their total assets to generate a more realistic view of their current wealth position. The Federal Reserve Bulletin provides data on median net worth, broken down by age brackets.

•	Based on the Federal Reserve Bulletin data, the Garzas areabove   the median net worth for their age group.
•	Theirhome   would be considered their dominant asset.
•	Based on their liabilities, itdoes not   appear that they have adequate liquid assets to meet their bill payments and to cover any small, unexpected expenses.
•	Their balance sheet lists their house at 8% higher than the purchase price. The equity in their home is $117,933.120