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)	$7,390
Purchase season football tickets in September	100
Additional entertainment for each month	260
Pay fall semester tuition in September	4,000
Pay rent at the beginning of each month	360
Pay for food each month	200
Pay apartment deposit on September 2 (to be returned December 15)	500
Part-time job earnings each month (net of taxes)	920

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.

Craig Kovar Cash Budget For the Four Months Ending December 31

Line Item Description	September	October	November	December
Estimated cash receipts from:
Additional entertainmentFoodPart-time jobRentTuitionPart-time job	$Part-time job	$Part-time job	$Part-time job	$Part-time job
Additional entertainmentDepositFoodRentTuitionDeposit				Deposit
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 ticketsSeason football tickets	$Season football tickets
Additional entertainmentCashInsuranceMovie ticketsPart-time jobAdditional entertainment	Additional entertainment	$Additional entertainment	$Additional entertainment	$Additional entertainment
CashInsuranceMovie ticketsPart-time jobTuitionTuition	Tuition
CashInsuranceMovie ticketsPart-time jobRentRent	Rent	Rent	Rent	Rent
CashFoodInsuranceMovie ticketsPart-time jobFood	Food	Food	Food	Food
DepositInsuranceMovie ticketsPart-time jobPrepaid rentDeposit	Deposit
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

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 1

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.