Question

In: Accounting

At the beginning of the school year, Craig Kovar decided to prepare a cash budget for...

At the beginning of the school year, Craig Kovar 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) $7,060
Purchase season football tickets in September 100
Additional entertainment for each month 250
Pay fall semester tuition in September 3,800
Pay rent at the beginning of each month 340
Pay for food each month 190
Pay apartment deposit on September 2 (to be returned December 15) 500
Part-time job earnings each month (net of taxes) 880

a. Prepare a cash budget for September, October, November, and December. Use the minus sign to indicate cash outflows, a decrease in cash or cash payments.

Craig Kovar
Cash Budget
For the Four Months Ending December 31
September October November December
Estimated cash receipts from:
$ $ $ $
Total cash receipts $ $ $ $
Less estimated cash payments for:
$
$ $ $
Total cash payments $ $ $ $
Cash increase (decrease) $ $ $ $
Cash balance at end of month $ $ $ $

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

c. What are the budget implications for Craig Kovar?

Craig can see that his present plan   sufficient cash. If Craig did not budget but went ahead with the original plan, he would be $   at the end of December, with no time left to adjust.

Solutions

Expert Solution

a.

Cash Budget ($)
September October November December
Estimated Cash Receipts:
Apartment Deposit 500
Partime Job earnings 880 880 880 880
Total Cash receipts (A) 880 880 880 1,380
Purchase of season ticket 100
Additional entertainment 250 250 250 250
Semester Tution 3,800
Rent 340 340 340 340
Food 190 190 190 190
Apartment deposit 500
Total Cash expenses (B) 5,180 780 780 780
Total Cash Increase/(decrease) (A-B) -4300 100 100 600
Opening Cash balance 7,060 2,760 2,860 2,960
Ending Cash Balance 2,760 2,860 2,960 3,560

b. Cash budgets are absolutely FLEXIBLE Budgets since the items very every month as presented above.

c. Cash Balance at end of December: $ 3560

Spring Tution Fees: $3,800

Hence Short of $ 240 (ie 3,800-3,560)

Craig can see that his present plan DOESNOT HAVE sufficient cash. If Craig did not budget but went ahead with the original plan, he would be $ 240 SHORT  at the end of December, with no time left to adjust.


Related Solutions

At the beginning of the school year, Craig Kovar decided to prepare a cash budget for...
At the beginning of the school year, Craig Kovar 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) $6,470 Purchase season football tickets in September 90 Additional entertainment for each month 220 Pay fall semester...
At the beginning of the school year, Craig Kovar decided to prepare a cash budget for...
At the beginning of the school year, Craig Kovar 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) $7,580 Purchase season football tickets in September 100 Additional entertainment for each month 260 Pay fall semester...
At the beginning of the school year, Craig Kovar decided to prepare a cash budget for...
At the beginning of the school year, Craig Kovar 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) $10,850 Purchase season football tickets in September 200 Additional entertainment for each month 310 Pay fall semester...
At the beginning of the school year, Craig Kovar decided to prepare a cash budget for...
At the beginning of the school year, Craig Kovar 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) $6,470 Purchase season football tickets in September 90 Additional entertainment for each month 220 Pay fall semester...
Personal Budget At the beginning of the school year, Craig Kovar decided to prepare a cash...
Personal Budget At the beginning of the school year, Craig Kovar 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) $7,010 Purchase season football tickets in September 100 Additional entertainment for each month 240 Pay...
Personal Budget At the beginning of the school year, Craig Kovar decided to prepare a cash...
Personal Budget At the beginning of the school year, Craig Kovar 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) $8,240 Purchase season football tickets in September 110 Additional entertainment for each month 290 Pay...
Personal Budget At the beginning of the school year, Craig Kovar decided to prepare a cash...
Personal Budget At the beginning of the school year, Craig Kovar 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) $7,510 Purchase season football tickets in September 100 Additional entertainment for each month 260 Pay...
Personal budget At the beginning of the school year, Craig Kovar decided to prepare a cash...
Personal budget At the beginning of the school year, Craig Kovar 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) $10,400 Purchase season football tickets in September 190 Additional entertainment for each month 290 Pay...
This is a Personal Budget: At the beginning of the school year, Craig Kovar decided to...
This is a Personal Budget: At the beginning of the school year, Craig Kovar 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) $7,630 Purchase season football tickets in September 100 Additional entertainment for each...
Answer completely and correctly please. At the beginning of the school year, Craig Kovar decided to...
Answer completely and correctly please. At the beginning of the school year, Craig Kovar 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) $9,250 Purchase season football tickets in September 160 Additional entertainment for each...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT