7. Preparing a cash budget

Dan and June started to create a budget (based on last years 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

Name(s): Dan and June Kuryaki
For the year ending:	As of December 31
		Dollars
Income
Wages and salaries	Name: Dan Kuryaki	$ 20,000
	Name: June Kuryaki	18,000
Bonuses and commissions	Dans bonus	2,000
(1) Total Income:		$40,000
Expenses
Housing		$6,756
Utilities	Dallas Power & Light	756
	U.S. Cellular	372
Food	Groceries	1,356
Transportation	Auto loan	4,320
	Public transportation	3,000
Insurance		1,126
Taxes		9,500
Fun money	Cruise to Mexico	3,000
Parents loan		875
(2) Total Expenses:		$31,061
Surplus (Deficit):		$8,939

In addition to the statement, you will need to know the following information:

	They estimated their net annual income (after taxes and employer deductions) at $15,000 for Dan and $13,500 for June
	Insurance is paid at the end of each calendar quarter
	June purchases her commuter pass on the first of each month
	The parents loan is money they borrowed from Junes parents to pay off their student loans. How much they pay each month is determined by them
	The fun money listed on the statement is the money spent for a cruise to Mexico. They didnt keep track of any other entertainment expenses (such as dinners out and movies) incurred during the year.

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.

Three-Month Cash Budget (By Month)
Name(s): Dan and June Kuryaki
For: Three months		Ending: March 31
	January	February	March	Total for Three Months
Income
Dans salary
Junes salary
Total income
Expenses
Rent
Utilities:
Dallas Power & Light
U.S. Cellular
Food
Automobile
Public transportation
Insurance
Parents loan
Fun money
Total expenses
Cash surplus (deficit)
Cumulative surplus (deficit)

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 increase their distributions from their retirement plans.

The couple needs to budget for contingencies and save for future goals.

The couple needs to increase their taxable income.