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: Cash balance, September 1 (from a summer job) $9,250 Purchase season football tickets in September 160 Additional entertainment for each month 250 Pay fall semester tuition in September 4,800 Pay rent at the beginning of each month 600 Pay for food each month 550 Pay apartment deposit on September 2 (to be returned December 15) 600 Part-time job earnings each month (net of taxes) 1,200 Prepare a cash budget for September, October, November, and December. Answer Check Figure: December 31 cash balance, $3,490 Are the four monthly budgets that are presented prepared as static budgets or flexible budgets? What are the budget implications for Craig Kovar?
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
At the beginning of the school year, Craig Kovar decided to prepare a
| Cash balance, September 1 (from a summer job) | $9,250 |
| Purchase season football tickets in September | 160 |
| Additional entertainment for each month | 250 |
| Pay fall semester tuition in September | 4,800 |
| Pay rent at the beginning of each month | 600 |
| Pay for food each month | 550 |
| Pay apartment deposit on September 2 (to be returned December 15) | 600 |
| Part-time job earnings each month (net of taxes) | 1,200 |
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Prepare a cash budget for September, October, November, and December.
AnswerCheck Figure: December 31 cash balance, $3,490
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Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?
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What are the budget implications for Craig Kovar?
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