Question: Developing a Cash Budget Develop a cash budget based on the following information about a preschool with a fiscal year beginning in January: Revenues: -Tuition

Developing a Cash Budget

Develop a cash budget based on the following information about a preschool with a fiscal year beginning in January:

Revenues:

-Tuition fee: $100,000 paid monthly

-Event income: $50,000 in November by Thanksgiving

-Foundation support: $200,000 semiannually (May and November)

Expenses:

-Salary and wages: $80,000 monthly

-Rent and insurance: $100,000 in January

-Supply and food: $10,000 monthly

-Administration and fundraising: $10,000 monthly

Assume the board of directors does not allow for short-term borrowing and that the cash safety margin each month is $80,000. How much operating reserve or liquidity should the preschool have?

Please show all calculations and explain your answers. Thank you.

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