At the beginning of the school year, Katherine Malloy 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)	$8,890
Purchase season football tickets in September	120
Additional entertainment for each month	310
Pay fall semester tuition in September	4,800
Pay rent at the beginning of each month	430
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)	1,100

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

KATHERINE MALLOY Cash Budget For the Four Months Ending December 31

	September	October	November	December
Estimated cash receipts from:
Part-time job	$fill in the blank 0bb06efa2fe500f_1	$fill in the blank 0bb06efa2fe500f_2	$fill in the blank 0bb06efa2fe500f_3	$fill in the blank 0bb06efa2fe500f_4
Deposit				fill in the blank 0bb06efa2fe500f_5
Total cash receipts	$fill in the blank 0bb06efa2fe500f_6	$fill in the blank 0bb06efa2fe500f_7	$fill in the blank 0bb06efa2fe500f_8	$fill in the blank 0bb06efa2fe500f_9
Estimated cash payments for:
Season football tickets	$fill in the blank 0bb06efa2fe500f_10
Additional entertainment	fill in the blank 0bb06efa2fe500f_11	$fill in the blank 0bb06efa2fe500f_12	$fill in the blank 0bb06efa2fe500f_13	$fill in the blank 0bb06efa2fe500f_14
Tuition	fill in the blank 0bb06efa2fe500f_15
Rent	fill in the blank 0bb06efa2fe500f_16	fill in the blank 0bb06efa2fe500f_17	fill in the blank 0bb06efa2fe500f_18	fill in the blank 0bb06efa2fe500f_19
Food	fill in the blank 0bb06efa2fe500f_20	fill in the blank 0bb06efa2fe500f_21	fill in the blank 0bb06efa2fe500f_22	fill in the blank 0bb06efa2fe500f_23
Deposit	fill in the blank 0bb06efa2fe500f_24
Total cash payments	$fill in the blank 0bb06efa2fe500f_25	$fill in the blank 0bb06efa2fe500f_26	$fill in the blank 0bb06efa2fe500f_27	$fill in the blank 0bb06efa2fe500f_28
Overall cash increase (decrease)	$fill in the blank 0bb06efa2fe500f_29	$fill in the blank 0bb06efa2fe500f_30	$fill in the blank 0bb06efa2fe500f_31	$fill in the blank 0bb06efa2fe500f_32
Cash balance at beginning of month	fill in the blank 0bb06efa2fe500f_33	fill in the blank 0bb06efa2fe500f_34	fill in the blank 0bb06efa2fe500f_35	fill in the blank 0bb06efa2fe500f_36
Cash balance at end of month	$fill in the blank 0bb06efa2fe500f_37	$fill in the blank 0bb06efa2fe500f_38	$fill in the blank 0bb06efa2fe500f_39	$fill in the blank 0bb06efa2fe500f_40

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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?

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

StaticFlexibleStatic

c. Malloy can see that her present plan

will providewill not providewill not provide

sufficient cash. If Malloy did not budget but went ahead with the original plan, she would be $fill in the blank e21062013047013_3

overshortshort

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

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