Developing a Cash Budget

Develop a cash budget based on the following information about a preschool with a fiscal year beginning in January:

Revenues:

-Tuition fee: $100,000 paid monthly

-Event income: $50,000 in November by Thanksgiving

-Foundation support: $200,000 semiannually (May and November)

Expenses:

-Salary and wages: $80,000 monthly

-Rent and insurance: $100,000 in January

-Supply and food: $10,000 monthly

-Administration and fundraising: $10,000 monthly

Assume the board of directors does not allow for short-term borrowing and that the cash safety margin each month is $80,000. How much operating reserve or liquidity should the preschool have?

Please show all calculations and explain how you got your final answer (the amount of liquidity/operating reserve that is required for the preschool). Thank you.