Assignment Seasons Catering and Company

Running Head: SEASONS CATERING AND COMPANY 1
SEASONS CATERING AND COMPANY

Running Head: SEASONS CATERING AND COMPANY
Table of Contents
Question 1...................................................................................................................................................3
Question 2...................................................................................................................................................3
Question 3...................................................................................................................................................3
Question 4...................................................................................................................................................3
Question 5...................................................................................................................................................4
Question 6...................................................................................................................................................4
Question 7...................................................................................................................................................5
Question 8...................................................................................................................................................6
Revised income Statement.......................................................................................................................6
Revised Balance Sheet.............................................................................................................................8

Running Head: SEASONS CATERING AND COMPANY
Question 1
Sales budget
January February March April May June Total (for Apr- Jun
Quarter)
Sales units 20000 24000 28000 35000 45000 60000 140000
Selling price 8 8 8 8 8 8 8
Sales 160000 192000 224000 280000 360000 480000 1120000
Question 2
Schedule of collection of sales January February March April May June
Total (for Apr- Jun
Quarter)
Sales 160000 192000 224000 280000 360000 480000 1120000
Collection of sales @ 25% 40000 48000 56000 70000 90000 120000 280000
Collection in following months @50% 80000 96000 112000 140000 180000 432000
Colelction in second month @ 25% 40000 48000 56000 70000 174000
Total Sales 40000 128000 192000 230000 286000 370000 886000
Question 3
Purchase budget January February March April May June
Total (for Apr- Jun
Quarter)
Units 20000 24000 28000 35000 45000 60000 140000
Desired ending inventory @90% 21600 25200 31500 40500 54000 36000 130500
Less: Beginnig inventory 21600 25200 31500 40500 54000 126000
Total Purchases 41600 27600 34300 44000 58500 42000 144500
Purchase price 5 5 5 5 5 5
Total purchases 208000 138000 171500 220000 292500 210000 722500
Question 4
Schedule of disbursements of
Purchases January February March April May June Total (for Apr- Jun
Quarter)
Total Purchases 208000 138000 171500 220000 292500 210000 722500
Payment of Purchases 104000 69000 85750 110000 146250 105000 361250
Payment of purchase in next month 104000 69000 85750 110000 146250 342000
Total collection per month 104000 173000 154750 195750 256250 251250 703250

Running Head: SEASONS CATERING AND COMPANY
Question 5
Seasons’ Catering Sales and
Co.
Cash Budget April May June Total
Cash Inflows
Sales 230000 286000 370000 886000
Loan from bank 35750 114250 89600
Net cash inflows 265750 400250 459600 886000
Cash outflows
Purchases 195750 256250 251250 703250
Purchase of land 25000
Variable sales commission 35000 45000 60000 140000
Fixed wages and salaries 22000 22000 22000 66000
Utilities 14000 14000 14000 42000
Miscellaneous expenses 3000 3000 3000 9000
Repayment of principle 35000 115000
Repayment of interest 4254
Net cash outflows 269750 400250 469504 960250
Net cash flows -4000 0 -9904 -74250
Cash at the beginning 14000 10000 20000
Cash at the end 10000 10000 10097
Question 6
Seasons’ Catering Sales and Co.
Budgeted income statement
for the quarter ending 30th June 2019
Particulars Amount
Sales 1120000
Less: Purchases -722500
Less: Variable costs -140000
Gross Profit 257500
Less: Expenses
Fixed wages and salaries 66000

Running Head: SEASONS CATERING AND COMPANY
Depreciation on fixed assets 4500
Utilities 42000
Miscellaneous expenses 9000
Total Expenses 121500
Earnings before interest 136000
Less: Interest 4254
Earnings after interest 131747
Question 7
Seasons’ Catering Sales and Co.
Budgeted Balance Sheet
as at 30th June 2019
Particulars Amount Amount
Assets
Current Assets
Cash 10097
Accounts Receivable 450000
Inventory 151100
Prepaid Insurance 14400
Less: Insurance expired 3600 10800
Non-Current Assets
Fixed Assets 172700
Less:: Accumulated Dep 4500
Land 25000 193200
Total 815197
Liabilities
Capital 300000
Retained Earnings 176850
Add: profit 131747 308597
Current Liabilities
Dividend Payable 12000
Accounts Payable 105000
Non-Current Liabilities
Loan 3 89600

Running Head: SEASONS CATERING AND COMPANY
Total 815197
Question 8
As per the current scenario of the recession, there are lots of factors that can affect the position of
the company. Due to recession the loans will not be available easily, the company if facing any
loans will not be able to pay back the current obligations and expenses. The interest rated will be
high and the company will not be able to maintain the cash balance of 10000. Further, if there are
20% bad debts or uncollectible amounts the cash budget will not get affected as the bad debts are
those debtors which are not going to be collected. The bad debts additionally are a non-cash
expenses and the cash budget deals with only cash related items. Henceforth, this would not
affect the cash budget, but will affect the balance sheet and the income statement. The
profitability of the company would be affected whereas the accounts receivables in balance sheet
will be reduced by 20% (Notarpietro & Rodano, 2016).
Revised income Statement
Seasons’ Catering Sales and Co.
Budgeted income statement
for the quarter ending 30th June 2019
Particulars Amount
Sales 1120000
Less: Purchases -722500
Less: Variable costs -140000
Gross Profit 257500
Less: Expenses
Fixed wages and salaries 66000
Bad debts 90000
Depreciation on fixed assets 4500
Utilities 42000
Miscellaneous expenses 9000
Total Expenses 211500

Running Head: SEASONS CATERING AND COMPANY
Earnings before interest 46000
Less: Interest 4254
Earnings after interest 41747
Revised Balance Sheet
Seasons’ Catering Sales and Co.
Budgeted Balance Sheet
as at 30th June 2019
Particulars Amount Amount
Assets
Current Assets
Cash 10097
Accounts Receivable 450000
Less: Bad debts 90000 360000
Inventory 151100
Prepaid Insurance 14400
Less: Insurance expired 3600 10800
Non-Current Assets
Fixed Assets 172700
Less:: Accumulated Dep 4500
Land 25000 193200
Total 725197
Liabilities
Capital 300000
Retained Earnings 176850
Add: profit 41747 218597
Current Liabilities
Dividend Payable 12000
Accounts Payable 105000
Non-Current Liabilities
Loan 3 89600
Total 725197

Running Head: SEASONS CATERING AND COMPANY
References
Notarpietro, A., & Rodano, M. L. (2016). The evolution of bad debts in Italy during the global
financial crisis and the sovereign debt crisis: a counterfactual analysis. Bank of Italy Occasional
Paper, (350).