Part A – 1:. From Allison’s after-tax cash flows, she h
Added on - 20 Sep 2019
Part A – 1:From Allison’s after-tax cash flows, she has to meet the expenses as provided. Cashflows remaining after meeting the various expenses will be the net cash flow for the month.ParticularsAmount ($)Amount ($)Cash Inflow after taxes3000Less: Cash Outflows attributable to the monthly expenses:1.Rent7502.Student loan payment2003.Utilities1504.Food3005.Recreation6006.Car expenses2007.Clothing150Total Cash Outflows(2350)Net Cash Flow for the month650Part A – 2:Judy has a $1,000 deficit given that her cash outflows ($4,000) exceed her cashinflows ($3,000). To meet the shortfall, she could either use a credit card or borrow thenecessary amount. This would lead to an increase in her liabilities. Alternatively, she coulddo extra work to make more money, which would increase her assets (i.e. cash). Besides, shecould even liquidate any investment to raise cash, in which case here investment assets woulddecrease and her liquid assets would increase, both by the same amounts, thereby having onoverall impact on the total assets.