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)	$8,630
Purchase season football tickets in September	120
Additional entertainment for each month	300
Pay fall semester tuition in September	4,700
Pay rent at the beginning of each month	420
Pay for food each month	240
Pay apartment deposit on September 2 (to be returned December 15)	600
Part-time job earnings each month (net of taxes)	1,070

Question Content Area

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.

	September	October	November	December
Estimated cash receipts from:
Additional entertainmentFoodPart-time jobRentTuition	$- Select -	$- Select -	$- Select -	$- Select -
Additional entertainmentDepositFoodRentTuition				- Select -
Total cash receipts	$fill in the blank 5c777c005f95026_8	$fill in the blank 5c777c005f95026_9	$fill in the blank 5c777c005f95026_10	$fill in the blank 5c777c005f95026_11
Less estimated cash payments for:
CashInsuranceMovie ticketsPart-time jobSeason football tickets	$- Select -
Additional entertainmentCashInsuranceMovie ticketsPart-time job	- Select -	$- Select -	$- Select -	$- Select -
CashInsuranceMovie ticketsPart-time jobTuition	- Select -
CashInsuranceMovie ticketsPart-time jobRent	- Select -	- Select -	- Select -	- Select -
CashFoodInsuranceMovie ticketsPart-time job	- Select -	- Select -	- Select -	- Select -
DepositInsuranceMovie ticketsPart-time jobPrepaid rent	- Select -
Total cash payments	$fill in the blank 5c777c005f95026_33	$fill in the blank 5c777c005f95026_34	$fill in the blank 5c777c005f95026_35	$fill in the blank 5c777c005f95026_36
Cash increase (decrease)	$fill in the blank 5c777c005f95026_37	$fill in the blank 5c777c005f95026_38	$fill in the blank 5c777c005f95026_39	$fill in the blank 5c777c005f95026_40
Less cash balance at beginning of monthPlus cash balance at beginning of month	- Select -	- Select -	- Select -	- Select -
Cash balance at end of month	$fill in the blank 5c777c005f95026_46	$fill in the blank 5c777c005f95026_47	$fill in the blank 5c777c005f95026_48	$fill in the blank 5c777c005f95026_49

Question Content Area

b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?

StaticFlexible

c. What are the budget implications for Craig Kovar?

Craig can see that his present plan

will providewill not provide

sufficient cash. If Craig did not budget but went ahead with the original plan, he would be $fill in the blank 6caae300205e070_3

overshort

at the end of December, with no time left to adjust.

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