Julia owes her dad $12. She wants a new blouse that just went on sale, so she borrows $20 from her sister. She pays her father $5 and spends the rest on the blouse. Which statement is true?

Question

Julia’s money status is $8 because she started at –$12 and borrowed $20.
Julia’s money status is –$7 because she started at –$12, got $20, but only paid $5 of her debt.
Julia’s money status is –$27 because she started at –$12, borrowed $20, but paid off $5.
Julia’s money status is –$32 because she began at –$12 and borrowed $20.

Answer 1

To determine Julia's money status, let's break down the transactions step by step.

1. Initial Debt to Dad: Julia owes $12, so her initial status is -$12.

2. Borrowed Money: She borrows $20 from her sister. Now, she effectively has: \[ -12 + 20 = 8 \] (She now has $8, but she has to pay back the $20 to her sister).

3. Payment to Dad: She pays her dad $5. Now, her debt to her dad becomes: \[ -12 + 5 = -7 \] (She now owes her dad $7).

4. Remaining Money After Payment: After paying her dad $5, she has: \[ 8 - 5 = 3 \] (She now has $3 left after making the payment).

5. Blouse Purchase: She spends the remaining $3 on the blouse.

Now, let's review her current financial status:

• She has no money left after buying the blouse.
• She owes her dad $7 (current debt).
• She owes her sister $20 (debt).

So, we can summarize her total money status:

• Assets = $0 (she has no cash left).
• Liabilities = $7 (to dad) + $20 (to sister) = $27 total liabilities.

Thus, Julia's overall money status is: \[ 0 - 27 = -27 \]

Now we can review the statements provided:

1. Statement 1: Julia’s money status is $8 because she started at –$12 and borrowed $20. (False)
2. Statement 2: Julia’s money status is –$7 because she started at –$12, got $20, but only paid $5 of her debt. (False)
3. Statement 3: Julia’s money status is –$27 because she started at –$12, borrowed $20, but paid off $5. (True)
4. Statement 4: Julia’s money status is –$32 because she began at –$12 and borrowed $20. (False)

Therefore, the true statement is: "Julia’s money status is –$27 because she started at –$12, borrowed $20, but paid off $5."