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) $9,060 Purchase season football tickets in September 120 Additional entertainment for each month 310 Pay fall semester tuition in September 4,900 Pay rent at the beginning of each month 440 Pay for food each month 250 Pay apartment deposit on September 2 (to be returned December 15) 600 Part-time job earnings each month (net of taxes) 1,120 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 MALLOYCash BudgetFor the Four Months Ending December 31 September October November December Estimated cash receipts from: Part-time job Deposit Total cash receipts Estimated cash payments for: Season football tickets Additional entertainment Tuition Rent Food Deposit Total cash payments Overall cash increase (decrease) Cash balance at beginning of month Cash balance at end of month b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets? ____________ c. Malloy can see that her present plan _ sufficient cash. If Malloy did not budget but went ahead with the original plan, she would be $_ _ at the end of December, with no time left to adjust.

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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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)	$9,060
Purchase season football tickets in September	120
Additional entertainment for each month	310
Pay fall semester tuition in September	4,900
Pay rent at the beginning of each month	440
Pay for food each month	250
Pay apartment deposit on September 2 (to be returned December 15)	600
Part-time job earnings each month (net of taxes)	1,120

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 MALLOYCash BudgetFor the Four Months Ending December 31

	September	October	November	December
Estimated cash receipts from:
Part-time job
Deposit
Total cash receipts
Estimated cash payments for:
Season football tickets
Additional entertainment
Tuition
Rent
Food
Deposit
Total cash payments
Overall cash increase (decrease)
Cash balance at beginning of month
Cash balance at end of month

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

c. Malloy can see that her present plan _______ sufficient cash. If Malloy did not budget but went ahead with the original plan, she would be $_______ _____ at the end of December, with no time left to adjust.

Definition Definition Estimate of an organization's cash flow for a 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.

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