At the beginning of the 2016 school year, Britney Logan decided to prepare a cas

Question

At the beginning of the 2016 school year, Britney Logan decided to prepare a cash budget for the months of September, October, November, and December. The budget must plan for enough cash on December 31 to pay the spring semester tuition, which is the same as the fall tuition. The following information relates to the budget:

a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except an overall cash decrease which should be indicated with a minus sign.

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b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?

Static

c. Logan can see that her present plan will not provide sufficient cash. If Logan did not budget but went ahead with the original plan, she would be $ short at the end of December, with no time left to adjust.

I need help finding the money she will be short at the end of December..

Cash balance, September 1 (from a summer job) $8,970 Purchase season football tickets in September 220 Additional entertainment for each month 560 Pay fall semester tuition in September 4,800 Pay rent at the beginning of each month 780 Pay for food each month 440 Pay apartment deposit on September 2 (to be returned December 15) 1,100 Part-time job earnings each month (net of taxes) 2,010

Explanation / Answer

Cash Budget: It contains the itemized sources of cash that are available and can be used in the future periods. It is used to prove if the company operations are met and the estimated cash is sourced at any point of time. The inputs to cash budget are obtained from various other budgets with iteized investments,debts and both interest incomes and interest expenses.

In the month of september the opening balance is 8970; the incoming receipts is 2010 and the payments are 7900. The total outstanding balance in the month if september is 8970+2010-7900=3080

In the Month of October the opening balance is 3080; the receipts are 2010 and the payments are 1780.

The total outstanding balance in the month of October is 3080+2010-1780=3310

In the month of November the opening balance is 3310; the receipts are 2010 and the payments are 1780

The total outstanding balance in the month of November is 3310+2010-1780=3540

In the month of December the opening balance is 3540, the receipts are 3110 and the payments are 1780

The total outstanding balance in the month of December is 3540+3110-1780=4870

B) The four monthly budgets are prepared as flexible budgets

C) Ideally the question seems to be asked for static budget point of view. Static budget is prepared taking the annual parameters into consideration. The original plan of Logan is not provided hence additional informatin is required

September October November December Estimated Cash receipts from: Part time Jobs 2010 2010 2010 2010 Deposits 1100 Total Cash receipts 2010 2010 2010 3110 Estimated Cash payments for: Season football Tickets 220 Additional Entertainment 560 560 560 560 Tution 4800 Rent 780 780 780 780 Food 440 440 440 440 Deposit 1100 Total Cash Payments 7900 1780 1780 1780 Cash increase (decrease) 5890 (-) 230 230 1330 Cash Balance at the beginning of the month 8970 3080 3310 3540 Cash Balance at the end of the month 3080 3310 3540 4870

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