At the beginning of the 2015 school year, Robert Logan decided to prepare a cash

Question

At the beginning of the 2015 school year, Robert 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:

Cash balance, September 1 (from a summer job) $6,750
Purchase season football tickets in September 200
Additional entertainment for each month 175
Pay fall semester tuition on September 3 4,300   
Pay rent at the beginning of each month 400
Pay for food each month 275
Pay apartment deposit on September 2 (to be returned December 15) 550
Parttime job earnings each month (net of taxes) 1,250

a. Prepare a cash budget for September, October, November, and December
b. Are the four monthly budgets that are presented prepared as static or flexible budgets?
c. What are the budget implications for Robert Logan?

Explanation / Answer

Cash Budget of Robert Logan

2The Budget prepared for 4 Months are static Budget.

3 Robert Logan will need additional $450 to Pay Sprin Samester Tution in addition to the above Cash Budget.

Paticulars September($) October($) November($) December($) Opening Cash Balance 6,750 2,100 2,500 2,900 Earnings of the Month 1,250 1,250 1250 1,250 Deposit Refund 0 0 0 550 Total Receipts 8,000 3,350 3,750 4,700 Payments: Season Football Ticket 200 0 0 0 Entertainment 175 175 175 175 Food Expense 275 275 275 275 Rent 400 400 400 400 Apartment Deposit 550 0 0 0 Total Expense 1,600 850 850 850 Amount Available for Fees 6,400 2,500 2,900 3,850 Samester Fees 4,300 0 0 4300 Net Amount Available 2,100 2,500 2,900 (450)

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