Final answer:
Joey's balance of cash on June 30 is $4,895. His June net income is $1,645 after accounting for the transactions made during the month. For his 0% financed car, each payment does not impact the net worth, unlike a loan with interest which would slow the increase in net worth.
Step-by-step explanation:
Joey began June 1, 2022, with $3,100 in cash. During the month, the following transactions affected his cash balance:
- Returned a cell phone: +$150 cash
- Purchased a laptop: -$1,200 cash
- Went to a concert: -$90 cash
- Received wages: +$3,200 cash
- Spent on food: -$300 cash
- Received interest on savings: +$35 cash
The utility bill of $310 is not due until July, so it does not affect June's cash balance. Joey's cash balance on June 30th is calculated as follows:
Starting Balance + Returns + Wages + Interest - Laptop - Concert - Food = Ending Balance
$3,100 + $150 + $3,200 + $35 - $1,200 - $90 - $300 = $4,895.
To prepare a personal income statement for Joey for June, we would list his income (wages and interest) and subtract expenses (laptop, concert, food). His utility bills are not considered in this statement as they are not due until July:
Total Income: Wages ($3,200) + Interest ($35) = $3,235
Total Expenses: Laptop ($1,200) + Concert ($90) + Food ($300) = $1,590
Net Income for June: Total Income - Total Expenses = $1,645.
Regarding the car purchased with 0% financing, each car payment would reduce Joey's liabilities without affecting his net worth, as no interest is being paid on the loan. However, if the loan had interest, each payment would still reduce the principal amount owed, but part of each payment would go towards interest, effectively reducing the amount by which the liability decreases each period, which in turn would slow the positive increase in net worth.