Personal Budget At the beginning of the 2014 school year, Britney Logan decided

Question

Personal Budget

At the beginning of the 2014 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.

Britney Logan

Cash Budget

For the Four Months Ending December 31, 2014

September

October

November

December

Estimated cash receipts from:

Part-time job

$  

$  

$  

$  

Deposit

  

Total cash receipts

$  

$  

$  

$  

Estimated cash payments for:

Season football tickets

$  

Additional entertainment

  

$  

$  

$  

Tuition

  

Rent

  

  

  

  

Food

  

  

  

  

Deposit

  

Total cash payments

$  

$  

  

$  

Cash increase (decrease)

$  

$  

$  

$  

Cash balance at beginning of month

  

  

  

  

Cash balance at end of month

$  

$  

$  

$  

b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?
SelectStaticFlexibleCorrect 1 of Item 2

c. Logan can see that her present plan Selectwill providewill not provideCorrect 2 of Item 2 sufficient cash. If Logan did not budget but went ahead with the original plan, she would be $ SelectovershortCorrect 4 of Item 2 at the end of December, with no time left to adjust.

Cash balance, September 1 (from a summer job) $7,630 Purchase season football tickets in September 100 Additional entertainment for each month 270 Pay fall semester tuition in September 4,100 Pay rent at the beginning of each month 370 Pay for food each month 210 Pay apartment deposit on September 2 (to be returned December 15) 500 Part-time job earnings each month (net of taxes) 950

Explanation / Answer

September October November December Estimated cash receipts from: Part-time job 950 950 950 950 Deposit 500 Total cash receipts 950 950 950 1450 Estimated cash payments for: Season football tickets 100 Additional entertainment 270 270 270 270 Tuition 4100 Rent 370 370 370 370 Food 210 210 210 210 Deposit 500 Total cash payments 5550 850 850 850 Cash increase (decrease) -4600 100 100 600 Cash balance at beginning of month 7630 3030 3130 3230 Cash balance at end of month 3030 3130 3230 3830 b Static budget 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.

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