Computation of a government's budgetary cushionFollowing are extracts from a city's General Fund balance sheet and statement of revenues, expenditures, and changes in fund balance.General Fund ExtractsFund Balance:Nonspendable (supplies inventory)$59,76028,600Restricted (intergovernmental grant)110,000Assigned (appropriated for next year's budget)Assigned (for future OPEB expenditures)16,500Unassigned1,292,740Total fund balance$1,507,600Total revenues$31,339,000Transfers in (all recurring)$400,400a) How much (in dollars) is available to help balance future budgets? $b) Calculate the budgetary cushion.Round the percentage to one decimal.%c) Using the rule of thumb suggested in the text, would the budgetary cushion be consideredbe considered reasonable, too high, or too low?

a) balance future budgets : Total Fund Balance - Certain Transfers…

Answered: a) How much (in dollars) is available…

a) How much (in dollars) is available to help balance future budgets? $ b) Calculate the budgetary cushion. Round the percentage to one decimal.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Cash budget

A cash budget is an estimate of an organization's cash flow for the future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future. If cash receipts are insufficient to cover future expenses, an organization may plan to obtain funds from other sources. After estimating the sales, purchase, and capital expenditure budgets for the year, management develops a cash budget. These budgets are created to ensure that an organization's cash flow is managed. It is important to note that only cash transactions are recorded when actual cash enters and exits an organization.

Question

Computation of a government's budgetary cushion
Following are extracts from a city's General Fund balance sheet and statement of revenues, expenditures, and changes in fund balance.
General Fund Extracts
Fund Balance:
Nonspendable (supplies inventory)
$59,760
28,600
Restricted (intergovernmental grant)
110,000
Assigned (appropriated for next year's budget)
Assigned (for future OPEB expenditures)
16,500
Unassigned
1,292,740
Total fund balance
$1,507,600
Total revenues
$31,339,000
Transfers in (all recurring)
$400,400
a) How much (in dollars) is available to help balance future budgets? $
b) Calculate the budgetary cushion.
Round the percentage to one decimal.
%
c) Using the rule of thumb suggested in the text, would the budgetary cushion be considered
be considered reasonable, too high, or too low?

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