At the beginning of the 2006 school year, Hakim Davis decided to prepare a cash budget for
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Cash balance, September 1 (from a summer job) . . . . . . . . . . . . . . . . . . . $6,000
Purchase season football tickets in September . . . . . . . . . . . . . . . . . . . . . 180
Additional entertainment for each month . . . . . . . . . . . . . . . . . . . . . . . . . 250
Pay fall semester tuition on September 3 . . . . . . . . . . . . . . . . . . . . . . . . . . 3,250
Pay rent at the beginning of each month . . . . . . . . . . . . . . . . . . . . . . . . . . 400
Pay for food each month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320
Pay apartment deposit on September 2 (to be returned December 15) . . . 500
Part-time job earnings each month (net of taxes) . . . . . . . . . . . . . . . . . . . . 1,000
a. Prepare a cash budget for September, October, November, and December.
b. Are the budgets prepared as static budgets or flexible budgets?
c. What are the budget implications for Hakim Davis?
Cash Budget
A cash budget is an estimation of the cash flows for a business over a specific period of time. These cash inflows and outflows include revenues collected, expenses paid, and loans receipts and payment. Its primary purpose is to provide the...
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Accounting
ISBN: 978-0324188004
21st Edition
Authors: Carl s. warren, James m. reeve, Philip e. fess
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