Question

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 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

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

Answer 1

Craig Kover
Cash Budget
For the four months ending December 31
Particulars	September	October	November	December
Opening Cash Balance	7,630	3,030	3,130	3,230
Estimated Cash receipts from:
Apartment deposit refunded	-	-	-	500
Part time job earnings	950	950	950	950
Total Cash Receipts	950	950	950	1,450
Less estimated cash payments for:
Season football match in Sep	(100)	-	-	-
Additional entertainment for each month	(270)	(270)	(270)	(270)
Pay fall semester tuition fee in Sep	(4,100)	-	-	-
Rent	(370)	(370)	(370)	(370)
Food	(210)	(210)	(210)	(210)
Apartment deposit paid	(500)	-	-	-
Total Cash Payments	(5,550)	(850)	(850)	(850)
Cash increase (decrease)	(4,600)	100	100	600
Cash balance at the end of the month	3,030	3,130	3,230	3,830
Please note that there is not much cash left in hand as on December to pay for Spring Semester Tuition fees, i.e. $4,100.

b. The four monthly budgets have been prepared as Static Budget as the budgets do not change with any circumstances and receipts and payments are fixed.

c. c. Craig can see that his present plan do not have sufficient cash. If Craig did not budget but went ahead with the original plan, he would be $ 270 short for Spring Semester Tuition fees at the end of December, with $ 3,830 in his hand.