Elimu Busara Foundation runs a group of secondary schools in the country. Among their schools is Masomo Bora High School. The schools are funded by school fees and partially sponsored by capitation from the government and donations from alumni and well-wishers.Masomo Bora High School is preparing the budget for the year 2025, with the three terms commencing January, May and September.
The following details relate to the budget preparation:
1. The school estimates it will have 120 students in form one, 110 students in form two, and 100 students in form three and 100 students in form four.
The form ones will report in February 2025.
The following is the fee structure that is payable by the parents per term:
Form 1 - Sh.33,500
Form 2 - Sh.36,500
Form 3 - Sh.43,500
Form 4 - Sh.45,000
2. Parents are usually required to pay 60% of the fee when the school opens, and the balance at the beginning of the next month (Form ones pay 60%
when they report in February and 40% in March).
3. The school receives a capitation of Sh.16,000 per student per term, which is received at the beginning of the term.
4. On average, the school receives donations of Sh.2.5 million per month but this reduces to 60% when the school is closed.
5. The school has a small farm from which it generates harvested produce. It is estimated that the produce generates Sh.200,000 per month.
6. In addition, the school hires out the bus every weekend for events earning Sh.60,000 per month except in December when the bus driver is on leave.
7. The school pays on average salaries and wages of Sh.6.2 million per month, even when students have closed.
8. The school spends on average Sh.550,000 on general consumables, which reduce to 60% when the school is closed.
9. The school buys new text books and also replaces old ones at the beginning of every term for Sh.650,000.
10. The school provides meals to staff and students at an average cost of Sh.1.5 million per month. This is catered for in the school fees and capitation.
The amount reduces to 40% when the school is closed.
11. Electricity and water bills average Sh.150,000 per month (and Sh.50,000 when the school is closed). Repairs and maintenance also amount to Sh.250,000 per month and reduces to 40% when the school is closed.
12. The school plans to buy additional learning and staff equipment worth Sh. 1.5 million in January and replace old furniture at a cost of Sh.2 million in May. The old furniture will be scrapped at Sh.200,000.
13. The school has a loan, for which it will pay the annual installment of Sh.2 million and interest of Sh.200,000 in December.
14. The School estimates that it will have cash balance of Sh.5.5 million on 1st January 2025.
Required:
Prepare a cash budget for the year ended 31 December 2025, on a month-by-month basis and also for the whole year.
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