Personal BudgetAt 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)$6,250Purchase season football tickets in September90Additional entertainment for each month220Pay fall semester tuition in September3,400Pay rent at the beginning of each month300Pay for food each month170Pay apartment deposit on September 2 (to be returned December 15)400Part-time job earnings each month (net of taxes)780 **Craig Kovar Cash Budget for the Four Months Ending December 31****Estimated Cash Receipts:**- **Part-time job:** ${ }$ for each month (September, October, November, December)- **Deposit:** ${ }$ for each month**Total Cash Receipts:**- ${ }$ for each month**Less Estimated Cash Payments for:**- **Season football tickets:** ${ }$- **Additional entertainment:** ${ }$- **Tuition:** ${ }$- **Rent:** ${ }$- **Food:** ${ }$- **Deposit:** ${ }$**Total Cash Payments:**- ${ }$ for each month**Cash Increase (Decrease):**- ${ }$ for each month**Plus Cash Balance at Beginning of Month:**- ${ }$ for each month**Cash Balance at End of Month:**- ${ }$ for each month**Diagram Explanation:**This table is a template for recording and forecasting a cash budget over a four-month period from September to December. It includes sections for inputs (cash receipts) and outputs (cash payments), with categories for each source of income and expense. The table allows for the calculation of the cash increase or decrease each month and the resultant cash balance at the month's end. It helps in planning and understanding financial flow over time. **Question:**b. Are the four monthly budgets that are presented prepared as static budgets or flexible budgets?**Answer:**Static ✔️**Question:**c. What are the budget implications for Craig Kovar?**Answer:**Craig can see that his present plan **will not provide** ✔️ sufficient cash. If Craig did not budget but went ahead with the original plan, he would be $ [blank] **short** ✔️ at the end of December, with no time left to adjust.

Cash Budget: Cash Budget is a schedule to record cash inflows and outflows over a period with a view to locating the timing and magnitude of cash surplus and shortage. It draws the attention of the financial executive for taking timely action to solve the problem of cash surplus and shortage.Craig cover Cash Budget For the four months ending December 31 Particular September Amount($) October Amount($) November Amount ($) December Amount($) Estimated cash receipts: (A) Part-time job 780 780 780 780 Apartment Deposit refunded 0 0 0 400 Total cash receipts 780 780 780 1180 Estimated cash payment for (B) Season football tickets in September 90 0 0 0 Additional entertainment for each month 220 220 220 220 Semester Tuition fees 3400 0 0 0 Rent paid 300 300 300 300 Food 170 170 170 170 Apartment Deposit 400 0 0 0 Spring tuition fees 0 0 0 3400 Total cash payments (B) 4,580 690 690 4,090 Cash increase (decrease) (A-B) (3,800) (90) (90) (2910) Add: Cash balance at beginning of the month 6,250 2,450 2,360 2,270 Cash balance at end of month 2,450 2,360 2,270 (640)Craig shall fall short by $640 at the end of December for payment of his spring tuition fees.

Answered: Personal Budget At the beginning of…

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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Question

Personal Budget

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)	$6,250
Purchase season football tickets in September	90
Additional entertainment for each month	220
Pay fall semester tuition in September	3,400
Pay rent at the beginning of each month	300
Pay for food each month	170
Pay apartment deposit on September 2 (to be returned December 15)	400
Part-time job earnings each month (net of taxes)	780

**Craig Kovar Cash Budget for the Four Months Ending December 31**

**Estimated Cash Receipts:**
- **Part-time job:** ${ }$ for each month (September, October, November, December)
- **Deposit:** ${ }$ for each month

**Total Cash Receipts:**
- ${ }$ for each month

**Less Estimated Cash Payments for:**
- **Season football tickets:** ${ }$
- **Additional entertainment:** ${ }$
- **Tuition:** ${ }$
- **Rent:** ${ }$
- **Food:** ${ }$
- **Deposit:** ${ }$

**Total Cash Payments:**
- ${ }$ for each month

**Cash Increase (Decrease):**
- ${ }$ for each month

**Plus Cash Balance at Beginning of Month:**
- ${ }$ for each month

**Cash Balance at End of Month:**
- ${ }$ for each month

**Diagram Explanation:**

This table is a template for recording and forecasting a cash budget over a four-month period from September to December. It includes sections for inputs (cash receipts) and outputs (cash payments), with categories for each source of income and expense. The table allows for the calculation of the cash increase or decrease each month and the resultant cash balance at the month's end. It helps in planning and understanding financial flow over time.

**Question:**

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

**Answer:**

Static ✔️

**Question:**

c. What are the budget implications for Craig Kovar?

**Answer:**

Craig can see that his present plan **will not provide** ✔️ sufficient cash. If Craig did not budget but went ahead with the original plan, he would be $ [blank] **short** ✔️ 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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