To prepare a monthly income and expense plan for the Terrels in 2003, we need to consider their expected income and expenses on a monthly basis.
Monthly income:
Donna's salary: $39,996 / 12 = $3,333
Sherman's income from painting and remodeling work in June, July, and August: 3,000 * 3 = $9,000
Total monthly income: $3,333 + $9,000 = $12,333
Monthly expenses:
Housing (rent): $6,600 / 12 = $550
Transportation: $5,100 / 12 = $425
Food: $8,100 / 12 = $675
Utilities: $3,000 / 12 = $250
Donna's payroll taxes: $12,000 / 12 = $1,000
Sherman's payroll taxes: $1,500 / 12 = $125
Life insurance: $720 / 12 = $60
Auto insurance: $1,500 / 12 = $125
Leisure and entertainment (excluding vacation in May): $1,800 / 12 = $150
Clothing: $1,500 / 12 = $125
Others: $3,900 / 12 = $325
Total monthly expenses: $3,605
To calculate the monthly surplus or deficit, we subtract total monthly expenses from total monthly income:
$12,333 - $3,605 = $8,728
Based on this plan, the Terrels can expect a monthly surplus of $8,728. However, they should keep in mind that unexpected events or additional expenses may affect their financial situation.
Regarding the unexpected remodeling project in April, assuming the $1,500 income is received in early June, this will add to their income for that month. They should adjust their budget for June accordingly. It would be ideal to allocate a portion of the additional income to any specific expenses or savings goals they have.
Since the Terrels have a monthly surplus of $8,728, they can use a portion of that surplus to cover any temporary shortfall during the months of May and early June when Sherman will not have his regular income yet. They can also consider using a portion of their liquid assets to bridge the gap if needed, but they should aim to maintain a balance of at least $600 as they prefer.
In summary, the Terrels' expected financial situation in 2003 appears stable with a monthly surplus. The unexpected remodeling project adding $1,500 to their income in June will help offset any temporary shortfall and ensure they can continue to meet their expenses. As long as they carefully manage their monthly budgets and allocate the additional income appropriately, they should be able to maintain their financial stability throughout the year.