At the beginning of the year, Ted Frey decided to prepare a cash budget for the year, based upon anticipated cash receipts and payments. The estimates in the budget represent a €œbest guess.€ The budget is as follows:

1. What does this budget suggest? In what ways is this information useful to Ted?
2. a. Some items in the budget are more certain than are others. Which items are the most certain? Which items are the most uncertain? What are the implications of these different levels of certainty to Ted€™s planning?
b. Some payment items are more controllable than others. Assuming that Ted plans to go to school, classify the items as controllable, partially controllable, or not controllable. What are the implications of controllable items to planning?
3. What actions could Ted take in order to avoid having the anticipated shortfall of $1,700 at the end of the year?
4. What does this budget fail to consider, and what are the implications of these omissions to Ted€™splanning?

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Expected annual cash receipts: Salary from summer job . Expected annual cash payments: . . .. 4,000 $14,000 Tuition . ~.. $ 4,500 400 Rent Food Utilities Entertainment 3,500 ....2,500 800 4,000 Total payments.. 15,700 $(1,700)