The First Finance Discussion Thread

hi , c.i. !

it's getting late , i'm getting tired - so the reply is short .
from what i've read - and that's from a canadian point of view - we should expect mainly "sideways" movements in the market with some sharp downward adjustments thrown in for good measure .

while canadians are being assured that the banks are "basically sound" , bank stocks are essentially were they were two years ago .

since our main retirement income is from various pensions - both canadian and german - there isn't much we can do personally.

to make ourselves feel good - and cut down on our already small gas consumption - we decided to buy a new (2008) honda accord .
our 1999 olds-intrigue didn't have much of a trade-in value .
since the 2009 cars will be out shortly , we got a reasonable cash discount .
sure feels good to drive a new car with all the latest dodads - and to reward ouselves for our "smart choice" , we went out for a great dinner after saturday's performance at the 1,000 island playhouse .
might as well live it up while we still can .

i'm sure that's not going to help you much - sorry about that !
we think that at our age "long-range planning" means : what do we want for dinner ?
hoping you are well !
hbg

Bravo for you and the Mrs. My long-range planning goes to the summer of 09 - for a trip to Mongolia.

The current financial woes are also global in nature (the price of oil is a factor), so I agree that the next president, no matter who is elected, won't have any easy fixes, nor will the Federal Reserve. And the effects of the sub-prime mortgage debacle will continue to reverberate for some time--the credit crisis is far from over.

Stocks are low, and the market continues to show volatility. Interest rates on safe investments, like CD's or money markets, are low, so money isn't earning much money. Property and school taxes on my home are very high, and they continue to climb. Add to that the rising inflation, particularly the rising costs of basic necessities, such as food, and home heating oil, and you have a dismal picture for many of those who are retired, or nearing retirement.

As long as one doesn't immediately need the money in IRA's or stocks to live on, they should leave these accounts untouched, and just ride it out until the economy picks up. At least 40% of my IRA is in liquid assets, money market funds, so I'm still earning, even though my stock mutual funds are down. And my stocks are reasonably well diversified, so I am hopeful about the long term outlook.

I've gone bank shopping and secured the highest CD rates I could find for the money I have in cash outside of my IRA. I took relatively short term CD's--no longer than a year--because I am hoping interest rates will go up in the near future.

I'm planning for my future by cutting down, as much as possible, on my current spending, and continuing to try to stash away as much as possible in my savings and IRA's. I pay my credit card in full at the end of each month, and I drive a fuel efficient car which is fully paid for. I'd like a new car, but I can wait for that. My home is paid for, but my school and property taxes are staggering, and there isn't much I can do about that.

I am also postponing full retirement for the time being, and will continue to work, at least part time, for a while longer, so I can continue to save and have more money to spend.

Decreasing spending, and trying to increase income, seems about the only way to try to cope with the current economic situation. But good management of cash flow is a smart strategy at any phase of life. You shouldn't spend money you don't really have on things you probably don't really need. Credit cards can be a terrible trap. I learned that from experience, and I'm not about to make that mistake again.

I do follow the economic and stockmarket news in the papers, on the internet, and on CNBC. I also read books and articles on personal finance, and I'm a big fan of Suze Orman, who I think gives excellent advice.

Basically, I'm in pretty good financial shape right now. I can manage my bills, and I don't need to draw upon my IRA or my investments, so I'm hoping to just ride out the current economic downturn. I realize that I am very fortunate compared to other people who are really hurting and having a hard time.

To digress a little, are there any accountants here who could help me with the odd question? I'm doing my business subject this semester (Accounting 1A) as part of my IT degree.

I worked in management for most of my career, but my forte used to be in accounting. Ask away.

to wilso :

c.i. and hbg welcome all up-and-coming accountants - as long ar you can count to TEN without using your fingers , you are in !
you'd probably be more qualified than those "subprime" accountants that added up the subprimes and other investmments - i bet they had some fingers missing !
hbg

Sure, Wilso. I've an associate (2yr) degree in the subject, and used to be a pretty good bookkeeper. Best of all, I almost always know my limitations.

Thanks guys. OK, one of our assignments this semester is an accounting practice set. An imaginary business using a periodic inventory system. It's got a month's transactions which we've got to post to the journals (general journal, cash receipts, cash payments, sales and purchases), then to ledger accounts (done), and then produce financial statements. I've done the unadjusted trial balance, the adjustments, and the adjusted trial balance (all on a worksheet) and they all balance with the correct amounts. The next question says that a stock take of closing inventory on the 30th June gave a certain amount, and use that information to complete the remaining columns of the worksheet (financial performance and financial position). I've got no idea exactly what to do with this balance of closing inventory. I've got values in the worksheet for inventory, sales, discounts, various expenses, cash, all the normal accounts that a retail business would have.

wilso wrote :



i've been "out of circulation" for over 20 years so you better wait and see if others agree with my explanation .

i am assuming that the "stock take" (or actual) inventory disagrees with the "book" inventory - if they are the same , no entry is required .
if the two differ , you have to make an "adjusting entry" to bring the "book" inventory in line with "stock take" (actual) inventory .

often the "stock take" will be lower than "book" (stuff gets lost , is stolen ... ...) . if the difference is substantial , management needs to be informed - but that's not the important part here .


assuming the "stock take" is $1,000 lower than "book" , you need to enter $1,000 against your "book inventory' (subtract) and make a compensating entry (addition) under "inventory loss" or similar heading .

so you have to include the change in inventory in the ADJUSTMENT colums before you can go on .

the next two colums (trial balance ?) would show the "adjusted" (lower) values for inventory and the loss - so total debits will still equal total credits .

i asssume that your textbook/workbook shows a completed trial baleance "after adjustments" somewhere - you may have to skip ahead a few pages to find it .

(now awaiting comments from the professionals ! if i'm wrong , i'll hang my head in shame for misleading wilso)
hbg

If that's not the heart of the problem (and correct), we are both wrong.

I've never worked merchandise inventory, but memory of school work tells me that is the entry.

You adjust the inventory on your balance sheet to the actual inventory on June 30, and the offset goes to the income statement as a gain or loss on inventory.

wilso lives "down under" , doesn't he ?
perhaps they do the bookkeeping "upside-down" - BIG GRIN !
hbg

So, debit on the right. Glad you didn't get that detailed, huh?

Whistling in the wind I'm afraid.

It's 1929 again but on a grander scale. They haff vays of meking you borrow.

It is called "temptation". Or the "psycho tax".

Sensual excess up against spiritual renunciation and Media has not only no interest in the latter but propagandises against it. It's Spam turns up on wande's Intelligent Design thread on an almost daily basis. City versus country. Slickers versus peasants. (Rubes in city argot.)

Salome's conundrum.

Herod--And I hear in the air something that is like the beating of wings, like the beating of vast wings. Do you not hear it?

roger wrote :



yea , after all wilso needs to do some work ... or something like the following might happpen :

teacher to student : "someone must have helped you with your assignment . "
student : "why do say that ? "
teacher : " because one person alone cannot possibly make that many mistakes ! "

HUGE GRIN !!!
hbg

Student to teacher: You'd better check your answer before you accuse anyone of having the same wrong answer.

Part of the reason I was confused with that part was the fact that I'd made a mistake in my ledger postings (because I'm getting it done ahead of the lessons on the various area's of accounting). We started accounting for retailing this week. So after the lecture and the reading I discovered that under the periodic inventory system, I shouldn't have recorded purchases of inventory in the inventory account. They were supposed to be posted to the purchases account. After I fixed that, then I only had two values for inventory (instead of 3!). The starting value on the debit side of the income statement, and the closing value on the credit side. The whole worksheet fell into place after that.

A +++ for wilso !
hbg