Tri-County Social Service Agency is a not-for-profit organization in the Midwest

Question

Tri-County Social Service Agency is a not-for-profit organization in the Midwest. Use the following information to complete the cash budget for the year ending December 31, 2016.

• The Board of Trustees requires that Tri-County maintain a minimum cash balance of $9,000.

• If cash is short, the agency may borrow from an endowment fund the amount required to maintain the $9,000 minimum. (An “endowment fund” is an investment fund set up by a nonprofit entity [e.g., church, university, or hospital] and used either for ongoing operations or for purposes specified by the donor(s) to the fund. Such donations are generally tax deductible for the donors.) Repayment must be made as soon as possible. No interest is charged.

• It is anticipated that the year 2016 will begin with an $12,000 cash balance.

• Contract revenue is received evenly during the year.

• Mental health income is expected to grow by $3,000 in the second and third quarters; no change is expected in the fourth quarter.

Required 2. Complete the cash budget for 2016, for each quarter and the year as a whole, using the template that follows. (Cash deficiency and repayments should be indicated by a minus sign. Enter your answers in thousands. Cash Budget for Tri-County Social Service Agency 2016 (in thousands) Quarters IV Year Cash balance, beginning Receipts 12 12 Grants Contracts Mental health income Charitable donations 292 60 227 90 53 470 450 230 341 Total cash available 525 Less Disbursements Salaries and benefits Office expenses Equipment purchases & maintenance Specific assistance 1,712 335 25 80 375 103 6 19 76 60 4 Total disbursements (68) 130 Excess (deficiency) of cash available over disbursements Financing: Borrowings from endowment fund 145 Repayments (27) Total financing effects Cash balance, ending

Explanation / Answer

Cash budget for 2016

Cash budget for tri county social service agency 2016 (in thousands) Quarters I II III IV Year Cash balance, beginning 12 0 0 0 12 Receipts                 Grants 90 99 37 66 292                 Contracts 15 15 15 15 60                Mental health income 53 56 59 59 227                Charitable donations 470 355 230 450 1505 Total cash available 640 525 341 590 2096 Less: Disbursements       Salaries and benefits 580 375 373 366 1712        Office expenses 103 96 76 60 335       Equipment purchases & maintenance 6 4 6 9 25       Specific assistance 19 14 22 25 80                Total disbursements 708 489 477 460 2134 Excess (Deficiency) of cash available over disbursements -68 36 -136 130 -38 Financing:         Barrowings from endowment fund 77 0 145 0 222         Repayment 0 -27 0 -121 -148             Total Financing effects 77 -27 145 -121 74 Cash balance, ending 9 9 9 9 36

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