At the beginning of the 2008 school year, Monroe Baker

At the beginning of the 2008 school year, Monroe Baker 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) . . . . . . . . . . . . . . . . . . . . . . $6,500
Purchase season football tickets in September . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Additional entertainment for each month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
Pay fall semester tuition on September 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500
Pay rent at the beginning of each month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350
Pay for food each month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Pay apartment deposit on September 2 (to be returned Dec. 15) . . . . . . . . . .. . . . 600
Part-time job earnings each month (net of taxes) . . . . . . . . . . . . . . . . . . . . . . . . . 800

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 Monroe Baker?

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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