7. Preparing a cash budget Brock and Sam started to create a budget (based on last year’s income and expense statement) but got stuck. They know that you have learned how to create budgets and are asking for your help. They would like you to input the correct values for the first three months of next year. Income and Expense Statement
In addition to the statement, you will need to know the following information:
Note: Enter a value in each blank cell to get full credit for this exercise, and round all dollar amounts to the nearest whole dollar.
Looking at the completed budget, what single item would you recommend that they add to their budget? Dividend and interest income Pensions and annuities Savings and investments This is because: The couple needs to budget for contingencies and save for future goals. The couple needs to increase their taxable income. The couple needs to increase their distributions from their retirement plans. |
Three-Month Cash Budget (By Month | |||||
Name(s): Brock and Sam Wilson | |||||
For Three months Ending on March 31 | |||||
Income | Calculations | January | February | March | Total for 3 months |
Brock's Salary | 15,000/12 | 1,250 | 1,250 | 1,250 | 3,750 |
Sam's Salary | 13,500/12 | 1,125 | 1,125 | 1,125 | 3,375 |
Total Income (A) | 28,500/12 | 2,375 | 2,375 | 2,375 | 7,125 |
Expenses | |||||
Rent | 5,400/12 | 450 | 450 | 450 | 1,350 |
Utilities: | |||||
Central Maine Power | 600/12 | 50 | 50 | 50 | 150 |
T-Mobile | 300/12 | 25 | 25 | 25 | 75 |
Food | 1,080/12 | 90 | 90 | 90 | 270 |
Automobile | 4,320/12 | 360 | 360 | 360 | 1,080 |
Public transportation | 2,400/12 | 200 | 200 | 200 | 600 |
Insurance | 900/4 | 0 | 0 | 225 | 225 |
Parents’ loan | 700/12 | 58 | 58 | 58 | 174 |
Fun money | 0 | 0 | 0 | 0 | |
Total Expenses (B) | 1,233 | 1,233 | 1,458 | 3,924 | |
Cash surplus (A - B) | 1,142 | 1,142 | 917 | 3,201 | |
Cumulative surplus | 1,142 | 1,142 + 1,142 = 2,284 | 2,284 + 917 = 3,201 | 3,201 |
Assumptions :-
Looking at the completed budget, the couple should add Savings and Investments to their budget.
Adding Savings and Investments, will help them realize all the three goals of -
7. Preparing a cash budget Brock and Sam started to create a budget (based on last...
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