Question

Personal Budget

At the beginning of the 2016 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:

Cash balance, September 1 (from a summer job)	$9,020
Purchase season football tickets in September	120
Additional entertainment for each month	310
Pay fall semester tuition in September	4,900
Pay rent at the beginning of each month	440
Pay for food each month	250
Pay apartment deposit on September 2 (to be returned December 15)	600
Part-time job earnings each month (net of taxes)	1,120

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, 2016
	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?

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

Answer 1

Britney Logan Cash Budget For The Four Months Ending December 31, 2016
	September	October	November	December
Estimated cash receipts from:
Part-time job	$1,120	$1,120	$1,120	$1,120
Deposit				600
Total cash receipts	1,120	1,120	1,120	1,720
Estimated cash payments for:
Season football tickets	120
Additional entertainment	310	310	310	310
Tuition	4,900
Rent	440	440	440	440
Food	250	250	250	250
Deposit	600
Total cash payments	6,620	1,000	1,000	1,000
Cash increase (decrease)	-5,500	120	120	720
Cash balance at beginning of month	9,020	3,520	3,640	3,760
Cash balance at end of month	$3,520	$3,640	$3,760	$4,460

b. The four monthly budgets that are presented are prepared as a static budget.

c. Brittany can see that her present plan can not provide sufficient cash. If logan did not budget but went ahead with the original plan, she would be short by $440 (4,900-4,460) at the end of December, with no time left to adjust.