Question

At the beginning of the school year, Katherine Malloy 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)	$6,200
Purchase season football tickets in September	80
Additional entertainment for each month	220
Pay fall semester tuition in September	3,300
Pay rent at the beginning of each month	300
Pay for food each month	170
Pay apartment deposit on September 2 (to be returned December 15)	400
Part-time job earnings each month (net of taxes)	770

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.

KATHERINE MALLOY
Cash Budget
For the Four Months Ending December 31
	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	$	$	$	$
Overall 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. Malloy can see that her present plan   sufficient cash. If Malloy 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

KATHERINE MALLOY
Cash Budget
For the Four Months Ending December 31
	September	October	November	December
Estimated cash receipts from:
Part-time job	770	770	770	770
Deposit				400
Total cash receipts	770	770	770	1170
Estimated cash payments for:
Season football tickets	80
Additional entertainment	220	220	220	220
Tuition	3300
Rent	300	300	300	300
Food	170	170	170	170
Deposit	400
Total cash payments	4470	690	690	690
Overall cash increase (decrease)	-3700	80	80	480
Cash balance at beginning of month	6200	2500	2580	2660
Cash balance at end of month	2500	2580	2660	3140
Static Budget
Does not have sufficient cash
Short of $3300-3140	160