Assumptions and Given Information

Oct 13, 2025 by talynt.org 18 views

As an accountant, it's essential to have a clear understanding of a client's financial situation to provide accurate and helpful advice. In this scenario, we're presented with a partially completed table that outlines a client's budget information as a percentage of their take-home pay, as well as both yearly and monthly dollar amounts. Our task is to help the accountant fill in the missing information.

The Budget Table

Category	Percent of Take-Home Pay	Yearly Dollar Amount	Monthly Dollar Amount
Housing
Transportation
Food
Insurance
Debt Repayment
Entertainment
Savings
Miscellaneous

Assumptions and Given Information

Let's assume that the client's take-home pay is $4,000 per month. We're also given the following information:

The client's housing expenses account for 30% of their take-home pay.
The client's transportation expenses account for 10% of their take-home pay.
The client's food expenses account for 15% of their take-home pay.
The client's insurance expenses account for 5% of their take-home pay.
The client's debt repayment expenses account for 10% of their take-home pay.
The client's entertainment expenses account for 5% of their take-home pay.
The client's savings goals are to save 10% of their take-home pay.
The client's miscellaneous expenses account for 5% of their take-home pay.

Calculating the Yearly and Monthly Dollar Amounts

To fill in the missing information, we'll first calculate the yearly and monthly dollar amounts for each category.

Housing

Percent of take-home pay: 30%
Yearly dollar amount: 30% of $4,000/month * 12 months = $14,400/year
Monthly dollar amount: $14,400/year ÷ 12 months = $1,200/month

Transportation

Percent of take-home pay: 10%
Yearly dollar amount: 10% of $4,000/month * 12 months = $4,800/year
Monthly dollar amount: $4,800/year ÷ 12 months = $400/month

Food

Percent of take-home pay: 15%
Yearly dollar amount: 15% of $4,000/month * 12 months = $6,000/year
Monthly dollar amount: $6,000/year ÷ 12 months = $500/month

Insurance

Percent of take-home pay: 5%
Yearly dollar amount: 5% of $4,000/month * 12 months = $2,400/year
Monthly dollar amount: $2,400/year ÷ 12 months = $200/month

Debt Repayment

Percent of take-home pay: 10%
Yearly dollar amount: 10% of $4,000/month * 12 months = $4,800/year
Monthly dollar amount: $4,800/year ÷ 12 months = $400/month

Entertainment

Percent of take-home pay: 5%
Yearly dollar amount: 5% of $4,000/month * 12 months = $2,400/year
Monthly dollar amount: $2,400/year ÷ 12 months = $200/month

Savings

Percent of take-home pay: 10%
Yearly dollar amount: 10% of $4,000/month * 12 months = $4,800/year
Monthly dollar amount: $4,800/year ÷ 12 months = $400/month

Miscellaneous

Percent of take-home pay: 5%
Yearly dollar amount: 5% of $4,000/month * 12 months = $2,400/year
Monthly dollar amount: $2,400/year ÷ 12 months = $200/month

The Completed Budget Table

Category	Percent of Take-Home Pay	Yearly Dollar Amount	Monthly Dollar Amount
Housing	30%	$14,400	$1,200
Transportation	10%	$4,800	$400
Food	15%	$6,000	$500
Insurance	5%	$2,400	$200
Debt Repayment	10%	$4,800	$400
Entertainment	5%	$2,400	$200
Savings	10%	$4,800	$400
Miscellaneous	5%	$2,400	$200

As an accountant, it's essential to have a clear understanding of a client's financial situation to provide accurate and helpful advice. In our previous article, we helped fill in the client's budget table, outlining their expenses as a percentage of their take-home pay, as well as both yearly and monthly dollar amounts. In this article, we'll address some frequently asked questions related to the client's budget.

Q: What is the total percentage of take-home pay allocated to expenses?

A: The total percentage of take-home pay allocated to expenses is 90% (30% for housing, 10% for transportation, 15% for food, 5% for insurance, 10% for debt repayment, 5% for entertainment, 10% for savings, and 5% for miscellaneous).

Q: What is the total yearly dollar amount allocated to expenses?

A: The total yearly dollar amount allocated to expenses is $43,200 ($14,400 for housing, $4,800 for transportation, $6,000 for food, $2,400 for insurance, $4,800 for debt repayment, $2,400 for entertainment, $4,800 for savings, and $2,400 for miscellaneous).

Q: What is the total monthly dollar amount allocated to expenses?

A: The total monthly dollar amount allocated to expenses is $3,600 ($1,200 for housing, $400 for transportation, $500 for food, $200 for insurance, $400 for debt repayment, $200 for entertainment, $400 for savings, and $200 for miscellaneous).

Q: What percentage of take-home pay is allocated to savings?

A: 10% of take-home pay is allocated to savings.

Q: What is the total yearly dollar amount allocated to savings?

A: The total yearly dollar amount allocated to savings is $4,800.

Q: What is the total monthly dollar amount allocated to savings?

A: The total monthly dollar amount allocated to savings is $400.

Q: What is the client's debt repayment strategy?

A: The client's debt repayment strategy is to allocate 10% of their take-home pay towards debt repayment.

Q: What is the total yearly dollar amount allocated to debt repayment?

A: The total yearly dollar amount allocated to debt repayment is $4,800.

Q: What is the total monthly dollar amount allocated to debt repayment?

A: The total monthly dollar amount allocated to debt repayment is $400.

Q: How can the client adjust their budget to achieve their financial goals?

A: The client can adjust their budget by reducing expenses in non-essential categories, such as entertainment and miscellaneous expenses. They can also consider increasing their income by taking on a side job or asking for a raise at work.

Q: What is the importance of budgeting for the client's financial well-being?

A: Budgeting is essential for the client's financial well-being as it helps them track their income and expenses, make informed financial decisions, and achieve their financial goals.

By understanding the client's budget and addressing these frequently asked questions, we can provide accurate and helpful advice to help them achieve their financial goals.