Critical Thinking: Developing a Balance Sheet and Income Statement On September 30, Ashley and Jason started arguing about who is better off. Jason said he was better off because he owned a PlayStation console that he bought last year for $350. He figures that, if needed, he could sell it to a friend for $280. Ashley argued that she was better off because she had $1,000 cash in her bank account and a vintage car that she bought two years ago for $800 but could now sell for $1,400. Jason countered that Ashley still owed $250 on her car loan and that Jason’s dad promised to buy him a Porsche if he does really well in his accounting class. Jason said he had $6,000 cash in his bank account right now because he just received a $4,800 student loan. Ashley knows that Jason also owes a tuition installment of $800 for this term. Ashley and Jason met again in early November. They asked how each other was doing. Ashley claimed that she’d become much more successful than Jason. She had a part-time job, where she earned $1,500 per month. Jason laughed at Ashley because he had won $1,950 on a lottery ticket he bought in October, and that was merely for the “work” of standing in line for a minute. It was just what he needed because his apartment costs $800 each month. Ashley, on the other hand, pays $470 for her share of the rent. Both Ashley and Jason have other normal living costs that total $950 each month.
1. Prepare a financial report that compares what Ashley and Jason each own and owe on September 30. Make a list of any decisions you had to make when preparing your report.
2. In a written report, identify and justify which of the two characters is better off. If you were a creditor, to whom would you rather lend money?
3. Prepare a report that compares what Ashley and Jason each earned during October. Make a list of any decisions you had to make when preparing your report.
4. In a written report, identify and justify which of the two characters is more successful. If you were a creditor considering a three-year loan to one of these characters, to whom would you rather lend money?