Question
Preparation of cash budget.Sam and Suzy Sizeman need to prepare a cash budget for the last quarter of 2020 to make sure they can cover
Preparation of cash budget.Sam and Suzy Sizeman need to prepare a cash budget for the last quarter of 2020 to make sure they can cover their expenditures during the period. Sam and Suzy have been preparing budgets for the past several years and have been able to identify the percentage of their income that they pay for most of for their cash outflows. These percentages are based on their take-home pay (e.g., monthly utilities normally run 5.5% of monthlytake-home pay). The information herecan be used to create their fourth-quarter budget for 2020.
a. Prepare a quarterly cash budget for Sam and Suzy covering the months of October through December
2020.
b. Are there individual months that incur a deficit?
c. What is the cumulative cash surplus or deficit by the end of December 2020?
| Income |
| |
| Monthly take-home pay | $4,877 | |
| Expenses | ||
| Housing | 29.9% | |
| Utilities | 5.5% | |
| Food | 10.4% | |
| Transportation | 6.8% | |
| Medical/dental | 0.5% | |
| Clothing for October & November | 3.2% | |
| Clothing for December | $447 | |
| Property taxes (November only) | 11.6% | |
| Appliances | 1.4% | |
| Personal Care | 2.3% | |
| Entertainment for October & November | 6.1% | |
| Entertainment for December | $1,525 | |
| Savings | 7.5% | |
| Other | 4.8% | |
| Excess in cash | 4.4% |
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Accounting
Authors: Carl s. warren, James m. reeve, Philip e. fess
21st Edition
978-0324400205, 324225016, 324188005, 324400209, 9780324225013, 978-0324188004
