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:

Line Item Description	Amount
Cash balance, September 1 (from a summer job)	$9,250
Purchase season football tickets in September	160
Additional entertainment for each month	250
Pay fall semester tuition in September	4,800
Pay rent at the beginning of each month	600
Pay for food each month	550
Pay apartment deposit on September 2 (to be returned December 15)	600
Part-time job earnings each month (net of taxes)	1,200

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.

Line Item Description	September	October	November	December
Estimated cash receipts from:
Additional entertainmentFoodPart-time jobRentTuition	$- Select -	$- Select -	$- Select -	$- Select -
Additional entertainmentDepositFoodRentTuition				- Select -
Total cash receipts	$Total cash receipts	$Total cash receipts	$Total cash receipts	$Total cash receipts
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	$Total cash payments	$Total cash payments	$Total cash payments	$Total cash payments
Cash increase (decrease)	$Cash increase (decrease)	$Cash increase (decrease)	$Cash increase (decrease)	$Cash increase (decrease)
Less cash balance at beginning of monthPlus cash balance at beginning of monthPlus cash balance at beginning of month	Plus cash balance at beginning of month	Plus cash balance at beginning of month	Plus cash balance at beginning of month	Plus cash balance at beginning of month
Cash balance at end of month	$Cash balance at end of month	$Cash balance at end of month	$Cash balance at end of month	$Cash balance at end of month

Feedback Area

Feedback

Sometimes an item may be a decrease in one period and an increase in a different period.

Review the definitions of static budgets and flexible budgets.

What weaknesses are shown by this cash budget?

Question Content Area

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

StaticFlexibleStatic

c. What are the budget implications for Craig Kovar?

Craig can see that his present plan fill in the blank 1 of 3

will providewill not providewill not provide

sufficient cash. If Craig did not budget but went ahead with the original plan, he would be fill in the blank 2 of 3$ fill in the blank 3 of 3

overshortshort

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