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    Budget Plan

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    Donna and Sherman Terrel are preparing a budget for 2010. Donna is a systems analyst with an airplane manufacturer, and Sherman is working on a master's degree in educational psychology. The Terrels do not have any children or other dependents. Donna estimates her salary will be about $45,600 in 2010; Sherman expects to work only during the summer months, doing painting and remodeling work for a building contractor. He anticipates an income from those activities of $3000 a month in June, July, and August. Sherman does have a scholarship that pays his tuition and also provides $3,600 a year of which $2400 is payable in February and $1200 is payable in October. The Terrels don't expect to have any other income in 2010.

    Donna and Sherman have listed their expected total expenses in 2010 as follows:

    Housing (rent) $8,640
    Transportation 6,000
    Food (includes dining out) 8,100
    Utilities 3,000
    Payroll taxes:


    Life - payable in May
    Auto - payable in January
    Leisure and entertainment:

    Vacation in May
    Clothing 1,800
    Others $3,900
    Total Expenses $50,460

    The Terrels will begin 2010 with about $1,000 in liquid assets, and they prefer not to draw this balance below $600 at any time during the year.

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    Solution Preview

    Donna's Total Salary in 2010 = $45,600
    Monthly Salary =$45,600/12 = $3800

    Total Housing Rent in 2010 = $8640
    Monthly Rent = $8640/12 = $720
    Total expenditure on ...

    Solution Summary

    This solution is comprised of a detailed explanation of the steps involved in preparing a Budget Plan. Supplemented with more than 300 words of text, and Excel worksheets, this step-by-step explanation of this complicated topic provides students with a clear perspective of Budget Planning.