1. At the beginning of the school year, Craig Kovar decided to prepare a A budget of estimated cash receipts and payments.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)	$10,850
   Purchase season football tickets in September	130
   Additional entertainment for each month	210
   Pay fall semester tuition in September	5,600
   Pay rent at the beginning of each month	500
   Pay for food each month	460
   Pay apartment deposit on September 2 (to be returned December 15)	500
   Part-time job earnings each month (net of taxes)	1,000

   This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

   Open spreadsheet

   a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except cash decrease which should be indicated with a minus sign.

   Craig Kovar
   Cash Budget
   For the Four Months Ending December 31
   	September		October		November		December
   Estimated cash receipts from:
   Additional entertainment Food Part-time job Rent Tuition		$		$		$		$
   Additional entertainment Deposit Food Rent Tuition
   Total cash receipts		$		$		$		$
   Less estimated cash payments for:
   Cash Insurance Movie tickets Part-time job Season football tickets		$
   Additional entertainment Cash Insurance Movie tickets Part-time job				$		$		$
   Cash Insurance Movie tickets Part-time job Tuition
   Cash Insurance Movie tickets Part-time job Rent
   Cash Food Insurance Movie tickets Part-time job
   Deposit Insurance Movie tickets Part-time job Prepaid rent
   Total cash payments		$		$		$		$
   Cash increase (decrease)		$		$		$		$
   Less cash balance at beginning of month Plus cash balance at beginning of month
   Cash balance at end of month		$		$		$		$

   b. Are the four monthly budgets that are presented prepared as A budget that does not adjust to changes in activity levels.static budgets or A budget that adjusts for varying rates of activity.flexible budgets?

   • Static
   • Flexible

   c. What are the budget implications for Craig Kovar?

   Craig can see that his present plan

   • will provide
   • will not provide
   sufficient cash. If Craig did not budget but went ahead with the original plan, he would be $
   • over
   • short
   at the end of December, with no time left to adjust.

   a. Prepare a cash budget for September, October, November, and December. Enter all amounts as positive values except cash decrease which should be indicated with a minus sign.

   Craig Kovar
   Cash Budget
   For the Four Months Ending December 31
   	September		October		November		December
   Estimated cash receipts from:
   		$		$		$		$
   Total cash receipts		$		$		$		$
   Less estimated cash payments for:
   		$
   				$		$		$
   Total cash payments		$		$		$		$
   Cash increase (decrease)		$		$		$		$
   Cash balance at end of month		$		$		$		$

   b. Are the four monthly budgets that are presented prepared as A budget that does not adjust to changes in activity levels.static budgets or A budget that adjusts for varying rates of activity.flexible budgets?

   c. What are the budget implications for Craig Kovar?

   Craig can see that his present plan sufficient cash. If Craig did not budget but went ahead with the original plan, he would be $ at the end of December, with no time left to adjust.

   a.

   Craig Kovar
   Cash Budget
   For the Four Months Ending December 31
   	September		October		November		December
   Estimated cash receipts from:
   Part-time job		$1,000		$1,000		$1,000		$1,000
   Deposit								500
   Total cash receipts		$1,000		$1,000		$1,000		$1,500
   Less estimated cash payments for:
   Season football tickets		$130
   Additional entertainment		210		$210		$210		$210
   Tuition		5,600
   Rent		500		500		500		500
   Food		460		460		460		460
   Deposit		500
   Total cash payments		$7,400		$1,170		$1,170		$1,170
   Cash increase (decrease)		-$6,400		-$170		-$170		$330
   Plus cash balance at beginning of month		10,850		4,450		4,280		4,110
   Cash balance at end of month		$4,450		$4,280		$4,110		$4,440

   b. The four-month budgets do not change with any identified activity level; thus, they are static budgets.

   c. While Craigs budget might first appear satisfactory, Craig must earn enough cash in order to pay for the spring semester tuition. His present budget shows that he will be $1,160 short of the tuition amount ($5,600 $4,440) by the time he needs to pay his spring tuition. Thus, Craig will likely need to adjust the plan before the fall term even begins. Some possibilities would be to rent a lower-cost apartment or to get a roommate. Other considerations include increasing his part-time job hours and reducing his monthly entertainment and food allowance, or making up the income difference with additional hours during Christmas break. Craig might also see about scholarship opportunities to reduce the tuition payment. The budget gives Craig time to adjust his plans to future events. In this case, Craig can see that his present plan will not provide sufficient cash, thus giving his four months to adjust. If Craig did not budget but went ahead with the original plan, he would be $1,160 short at the end of December, with no time left to adjust.