Statement of changes to personal net worth
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The changes in net worth for the year ended December 31, 2004, follow:
Realized increases in net worth:
Salary $60,000
Dividend income $2,500
Interest income $2,000
Gain on sale of marketable securities $500
Realized decreases in net worth:
Income taxes $20,000
Interest expense $6,000
Personal Expenditures $29,000
Unrealized increases in net worth:
Stock options $3,000
Land $7,000
Residence $5,000
Unrealized decreases in net worth:
Boat $3,000
Jewelry $1,000
Furnishings $4,000
Estimated income taxes on the diff
between the estimated current values
of assets and the estimated current
amounts of liabilities and their tax
bases $15,000
Net worht at the beginning of the year $150,000
a. Prepare a statement of changes in net worth for the year ended December 31, 2004
b. Comment on the statment of changes in net worth.
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Solution Summary
The solution presents a statement of changes in personal net worth following suggested formats in accounting literature. The statement is not required as part of personal financial statements, but is informative as explained in the solution.
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Statement of changes in net worth
For the year ended December 31, 2004
Beginning net worth, January 1, 2004 150,000
Increases:
Income
Salary 60,000
Dividend income 2,500
Interest income 2,000
Gain on sale of marketable securities 500 65,000
Estimated increases fair market value
Stock options 3,000
Land 7,000
Residence 5,000 15,000
Total increases 230,000
Decreases:
Expenses
Personal expenditures 29,000
Interest expense 6,000
Income ...
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