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January 9, 2013

Mr. Devzon Porras, MSA, CPA
Faculty of the College of Accounting Education
University of Mindanao, Davao City



Sir Porras,




Greetings!


In partial completion of the requirements for the subject Finance 21, I would like to present to
you the following documents and statements in lieu of your requirement of letting us have our
“2-week long business” operations with any business of our choice.


I have to admit that I am no entrepreneur and domestic goddess per se but for the sake of the
subject and for the sake of truly appreciating the business world – entrepreneurship if I may be
exact, here are the outputs for my business.


I decided on having a small chocolate truffle business. So basically I made chocolate truffles.
The process is quite easy, first, melt the chocolate. I decided to use Goya Dark Chocolate for it is
not too sweet and not too expensive also since I am only operating on a limited capital budget of
two hundred and fifty pesos (250php). In order to melt the chocolate, I decided on placing it
inside a pre-heated bowl and carefully mix it. I would present the steps in making this recipe on
to the next documents that I would present.


I got the idea from Food Network, thank God for that channel. Kidding aside, judging on how
my business went, I could say that it is likely to be successful in the future if given enough time
and enough effort. However, I could also say that I did have flaws during my business
operations; the consistency of my quantities, the consistency of my the taste and flavour of my
product – since I often shifted from muscovado to cocoa powder to Milo in terms of my coating
for my chocolate truffles. I did not also opened to wide range of buyers since I frequently sold
my products to my neighbours and relatives but also, this opened to another possibility that I
could have occasional orders for the product which I actually did have during the New Year. I
were not able to complete the business for the required two weeks – fourteen days to be exact
and that is because of some personal reasons. Thus, I still present to you the requirements for this
project. I had to make the most of what I could.


Hence, in accordance of this requirement I present you the financial statements of my small
chocolate truffles business to show on how my business went in a short span of two weeks or
twelve days if I may say to be exact. Also I present to you the marketing strategies I used and
applied in order to promote and sell my product hence to acquire higher sales and greater profit
per se. In lieu of this, I also have my realization regarding this requirement, and my thoughts
regarding the small business I ventured in.


Hoping this would give you thoughts to see whether or not I did well in the short span of my
business.


Expecting and hoping for your feedback soon!




Sincerely,


Kristine Joyce Tinga, BSA-student
University of Mindanao, Matina Campus
INGREDIENTS


10 packs of 38g Goya Dark Chocolate
Muscovado Sugar
Brown Sugar
Milo
White Sugar




PROCEDURES


   1. Pre-heat the pan/bowl
   2. Chop/slice the chocolates
   3. Put them in the bowl
   4. Pound/crush until medium-melted
   5. Use spatula or spoon (in my case I used spoon) to mix the chocolate
   6. Make sure the chocolate is free from chunks and bits of un-melted chocolates
   7. When properly and thoroughly melted, chill for about 45-90 minutes.(in my case I opted
       for 1 hour)
   8. Take out from the fridge, and grab a handful and roll them with your fingers until you
       make a circle
   9. Roll the truffle on a bowl of muscovado sugar.
   10. Viola! You now have your very own chocolate truffle. You can add peppermint syrup or
       vanilla if you like for additional taste. You can also use brown sugar instead of
       muscovado or any cocoa or milk powder depending on your choice.
MARKETING STRATEGY



        Okay, so here goes. Since my target market are my neighbours, I came up with a very
basic marketing strategy – Personal Selling; face-to-face contact with my customers which are
practically my neighbours. In layman’s terms, what I did was basically – visit each house door-
to-door in order for me to introduce my product and give my contact number.



       I thought of doing the consignment thing but did not push through with it because first, I
had to divide the profits. Second, I could not have any guaranty of keeping my product fresh
through my consignee even though he/she has the inherent responsibility of keeping it safe.
Third, my consignee options were not really that eligible; a sari-sari store, a bakery, a mini-mart,
a burger stand, a veggie-stall.



       In marketing terms, I could say that my marketing strategy could be related to one of
the market coverage strategies – the Differentiated Marketing.



      Differentiated Marketing by definition concentrates on several market segments
and designs separate product offers.



        It can be related to my case in such way that, I also have different market segments
because my neighbours’ ages varies and so is their tastes and consumption and I also have
separate product offers because some neighbours wanted to buy a couple of pieces only while
others opted to buy a lot.
STATEMENT OF COMPREHENSIVE INCOME




INCOME                          %        Amount




NET SALES                       100%     2,800php
Total Profit                    100%     2,800php


Cost of Sales                   73.98%   2071.30php


Total Cost of Goods Sold                 2071.30php


TOTAL INCOME                             728.70


Expenses:
Consumption Expense             6.53%    182.92




NET INCOME                      19.49%   545.78php
STATEMENT OF FINANCIAL POSITION




ASSETS
     Cash                         318php
     Inventories                  660.70php


TOTAL ASSETS                      978.70php


LIABILITIES
     Accounts Payable             120php


OWNER’S EQUITY
     Tinga, Capital               858.7php


TOTAL LIABILITIES
     AND OWNER’S EQUITY           978.70php
REALIZATION and REFLECTION




       During the two-week course of my very short-termed, chocolate truffles business I
realized that one can start a small business even at home using the products and materials that are
within reach and can be found at home or in stores nearby.


       I also realized that it is not easy doing such thing because it requires time, effort and
dedication. To be perfectly honest, I really did not have my heart in this requirement however,
there are things that one has to do so I convinced myself to just give it a shot.


       The first days were not so bad; I was able to sell all of my truffles because I sold them to
kids who were playing outdoors, to my neighbours and to some of my relatives who were
visiting. However, there were days when not all my truffles were sold which made me really sad
because first, I really put a lot of effort in making them, second I lost quite a good amount of
mark-up and sales and lastly, I could not sell them the next day because they would not taste that
good anymore so I had no choice but to eat them.


       My small chocolate truffles business did okay in the span of twelve days if I may say and
it feels good to start something on your own, earn a little on your own. It feels good to see the
fruit of your very own labor in your own hands. However, I still do not have my whole heart on
this because being an entrepreneur is not part of my plans and goals. Although I can still do this
business occasionally - whenever I receive orders and request but regularly? I doubt so.


       So that is practically all of it. Starting small and earning small is good and it feels nice
and fulfilling as well because the fruit of your very own labor is right in front of you. With
proper time management, dedication, effort, selling and promoting skills – a small business such
as mine could turn out great in the long run.


       As they say, great things come from small beginnings.
GENERAL JOURNAL




  2012     Cash
 Dec. 22      Tinga, Capital                               250
           To record the initial investment of Tinga
           Inventory
              Cash                                         210
           To record the purchases of ingredients
           Cash
            Sales                                          312
           To record the sales for the day
           Cost of Sales
             Inventory                                    209.82
           To record the cost of goods sold for the day


           Inventory
 Dec. 23    Cash                                           200
           To record the purchase of ingredients
           Cash
            Sales                                          248
           To record sales for the day
           Cost of Sales
            Inventory                                     166.78
           To record the cost of goods sold


           Inventory
 Dec. 24    Cash                                           248
           To record the purchase of ingredients
           Cash
            Sales                                          280
To record sales for the day
          Cost of Sales
           Inventory                              188.30
          To record the cost of goods sold


          Inventory
Dec. 26    Cash                                    327
          To record the purchase of ingredients
          Cash
           Sales                                   304
          To record sales for the day
          Cost of Sales
           Inventory                              204.44
          To record the cost of goods sold


          Inventory
Dec. 27    Cash                                    280
          To record the purchase of ingredients
          Cash
           Sales                                   184
          To record sales for the day
          Cost of Sales
           Inventory                              123.74
          To record the cost of goods sold
          Consumption Expense
           Inventory                              86.08
          To record the consumption of unsold
          products for the day
Purchases
Dec. 28    Cash                                    172
          To record the purchase of ingredients
          Cash
           Sales                                   224
          To record sales for the day
          Cost of Sales
           Inventory                              150.64
          To record the cost of goods sold


          Inventory
Dec. 29    Cash                                    268
          To record the purchase of ingredients


          Cash
           Sales                                   256
          To record the sales for the day
          Cost of Sales
           Inventory                              172.16
          To record the cost of goods sold


          Inventory
Dec. 30    Cash                                    261
          To record the purchase of ingredients
          Cash
           Sales                                   248
          To record sales for the day
          Cost of Sales
           Inventory                              166.78
          To record the cost of goods sold
Inventory
Dec. 31    Cash                                        292
          To record the purchase of ingredients
          Cash
           Sales                                       328
          To record sales for the day
          Cost of Sales
           Inventory                                  225.96
          To record the cost of goods sold


 2013     Inventory
Jan. 2     Cash                                        282
          To record the purchase of ingredients
          Cash
           Sales                                       184
          To record sales for the day
          Cost of Sales
           Inventory                                  123.74
          To record the cost of goods sold
          Consumption Expense
           Inventory                                  96.84
          To record the consumption of unsold goods
          for the day


          Inventory
Jan. 3     Cash                                        192
          To record the purchase of ingredients
          Cash
           Sales                                       232
To record sales for the day
           Cost of Sales
             Inventory                                              156.02
           To record the cost of goods sold


           Class Contribution
             Accounts Payable                                        120
           To record proposed class contribution from
           profit


           Sales                                        2800
             Cost of Sales                                1888.38
             Expenses                                      132.92
             Income Summary                                778.70
           To close income and expenses


           Income Summary
             Tinga, Captial                                         778.70
           To close the income summary account


GENERAL LEDGER




                                         CASH
12-22-12                   250                                 210
                           312
12-23-12                   248                                 200
12-24-12                   280                                 248
12-26-12                   304                                 327
12-27-12                   184                                 280
12-28-12    224                   172
12-29-12    256                   268
12-30-12    248                   261
12-31-12    328                   292
01-02-13    184                   282
01-03-13    232                   192
           3050                   2732
            318




                    INVENTORY
12-22-12    210                  209.82
12-23-12    200                  166.78
12-24-12    248                  188.30
12-26-12    327                  204.44
12-27-12    280                  209.82
12-28-12    172                  150.64
12-29-12    268                  172.16
12-30-12    261                  166.78
12-31-12    292                  225.96
01-02-13    282                  220.58
01-03-13    192                  156.02
           2732                  2071.30
           660.70


              ACCOUNTS PAYABLE
                                  120
                                  120
CONSUMPTION EXPENSES
12-27-12   86.08
01-03-13   96.84
           182.92
NOTES – INCOME STATEMENT


(1)
Beginning Inventory                                                          0
Purchases                                                                    2732php


Goods Available For Sale                                                     2732php
Ending Inventory                                                             660.70php


Cost of Goods Sold                                                           2071.30php




(2)
        The consumption expenses for the dates December 27, 2012 and January 2, 2013 are
actually goods that were not sold and rather consumed by me and my family. I decided not to sell
them anymore the following day because the texture and moisture of the product will be affected
if chilled overnight and will not taste as good as it should if it were fresh and it will be much
harder to bite and chew. If put in the refrigerator rather than the freezer, the product will moist
and may smell like the refrigerator which is not good since it could affect the image of my
product when it comes to freshness; and I do not want to risk the quality of my product that
could affect my profitability since I am still starting.


        These expenses are credited to the inventory account net of mark-up since it is the actual
cost of the goods. However, even if it is deemed to have been sold, I am operating on a sole
proprietor basis and these consumption expenses are rather personal and still could be reflected
in my financial statements.


(3)
The cost of goods sold is net of the mark-up price and I believe that the higher the sales, the
lesser the cost of goods sold since the profit margin mark-up absorbs the latter.
NOTES – FINANCIAL POSITION




(1)
       The aforementioned accounts payable reflects the class contribution that I will be
participating in. Hence, I decided to get the money from the profit of this business since it would
be better because I could already spare beforehand the contribution and avoid contingencies such
as I might overspend and unwillingly spend the allotted contribution.


(2)
       The inventories stated are deemed to be the remnants of the muscovado sugar, Milo and
brown sugar. Hence, I no longer have finished goods on hand because as mentioned earlier,
unsold and are already consumed by me and my family. Thus, there are also no more dark
chocolates left since I melt everything I purchase so that I can convert it to finished goods –
chocolate truffles. I do this so that I can make the most of what I have.
PRODUCT PRICING




250php -210php = 40php


210php – ingredients used to make chocolate truffles.


On the first day, I was able to make 78 chocolate truffles so...


210php/78pcs = 2.69php/chocolate truffle
Selling price                       4php
Less: Unit Price                    2.69php


Total mark-up per unit              1.31php


                                  48.70% mark-up on price


Note:
        I decided to use the same unit price over the days during the operations to uniformity
purposes.

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fin21_req

  • 1. January 9, 2013 Mr. Devzon Porras, MSA, CPA Faculty of the College of Accounting Education University of Mindanao, Davao City Sir Porras, Greetings! In partial completion of the requirements for the subject Finance 21, I would like to present to you the following documents and statements in lieu of your requirement of letting us have our “2-week long business” operations with any business of our choice. I have to admit that I am no entrepreneur and domestic goddess per se but for the sake of the subject and for the sake of truly appreciating the business world – entrepreneurship if I may be exact, here are the outputs for my business. I decided on having a small chocolate truffle business. So basically I made chocolate truffles. The process is quite easy, first, melt the chocolate. I decided to use Goya Dark Chocolate for it is not too sweet and not too expensive also since I am only operating on a limited capital budget of two hundred and fifty pesos (250php). In order to melt the chocolate, I decided on placing it inside a pre-heated bowl and carefully mix it. I would present the steps in making this recipe on to the next documents that I would present. I got the idea from Food Network, thank God for that channel. Kidding aside, judging on how my business went, I could say that it is likely to be successful in the future if given enough time and enough effort. However, I could also say that I did have flaws during my business operations; the consistency of my quantities, the consistency of my the taste and flavour of my product – since I often shifted from muscovado to cocoa powder to Milo in terms of my coating for my chocolate truffles. I did not also opened to wide range of buyers since I frequently sold
  • 2. my products to my neighbours and relatives but also, this opened to another possibility that I could have occasional orders for the product which I actually did have during the New Year. I were not able to complete the business for the required two weeks – fourteen days to be exact and that is because of some personal reasons. Thus, I still present to you the requirements for this project. I had to make the most of what I could. Hence, in accordance of this requirement I present you the financial statements of my small chocolate truffles business to show on how my business went in a short span of two weeks or twelve days if I may say to be exact. Also I present to you the marketing strategies I used and applied in order to promote and sell my product hence to acquire higher sales and greater profit per se. In lieu of this, I also have my realization regarding this requirement, and my thoughts regarding the small business I ventured in. Hoping this would give you thoughts to see whether or not I did well in the short span of my business. Expecting and hoping for your feedback soon! Sincerely, Kristine Joyce Tinga, BSA-student University of Mindanao, Matina Campus
  • 3. INGREDIENTS 10 packs of 38g Goya Dark Chocolate Muscovado Sugar Brown Sugar Milo White Sugar PROCEDURES 1. Pre-heat the pan/bowl 2. Chop/slice the chocolates 3. Put them in the bowl 4. Pound/crush until medium-melted 5. Use spatula or spoon (in my case I used spoon) to mix the chocolate 6. Make sure the chocolate is free from chunks and bits of un-melted chocolates 7. When properly and thoroughly melted, chill for about 45-90 minutes.(in my case I opted for 1 hour) 8. Take out from the fridge, and grab a handful and roll them with your fingers until you make a circle 9. Roll the truffle on a bowl of muscovado sugar. 10. Viola! You now have your very own chocolate truffle. You can add peppermint syrup or vanilla if you like for additional taste. You can also use brown sugar instead of muscovado or any cocoa or milk powder depending on your choice.
  • 4. MARKETING STRATEGY Okay, so here goes. Since my target market are my neighbours, I came up with a very basic marketing strategy – Personal Selling; face-to-face contact with my customers which are practically my neighbours. In layman’s terms, what I did was basically – visit each house door- to-door in order for me to introduce my product and give my contact number. I thought of doing the consignment thing but did not push through with it because first, I had to divide the profits. Second, I could not have any guaranty of keeping my product fresh through my consignee even though he/she has the inherent responsibility of keeping it safe. Third, my consignee options were not really that eligible; a sari-sari store, a bakery, a mini-mart, a burger stand, a veggie-stall. In marketing terms, I could say that my marketing strategy could be related to one of the market coverage strategies – the Differentiated Marketing. Differentiated Marketing by definition concentrates on several market segments and designs separate product offers. It can be related to my case in such way that, I also have different market segments because my neighbours’ ages varies and so is their tastes and consumption and I also have separate product offers because some neighbours wanted to buy a couple of pieces only while others opted to buy a lot.
  • 5. STATEMENT OF COMPREHENSIVE INCOME INCOME % Amount NET SALES 100% 2,800php Total Profit 100% 2,800php Cost of Sales 73.98% 2071.30php Total Cost of Goods Sold 2071.30php TOTAL INCOME 728.70 Expenses: Consumption Expense 6.53% 182.92 NET INCOME 19.49% 545.78php
  • 6. STATEMENT OF FINANCIAL POSITION ASSETS Cash 318php Inventories 660.70php TOTAL ASSETS 978.70php LIABILITIES Accounts Payable 120php OWNER’S EQUITY Tinga, Capital 858.7php TOTAL LIABILITIES AND OWNER’S EQUITY 978.70php
  • 7. REALIZATION and REFLECTION During the two-week course of my very short-termed, chocolate truffles business I realized that one can start a small business even at home using the products and materials that are within reach and can be found at home or in stores nearby. I also realized that it is not easy doing such thing because it requires time, effort and dedication. To be perfectly honest, I really did not have my heart in this requirement however, there are things that one has to do so I convinced myself to just give it a shot. The first days were not so bad; I was able to sell all of my truffles because I sold them to kids who were playing outdoors, to my neighbours and to some of my relatives who were visiting. However, there were days when not all my truffles were sold which made me really sad because first, I really put a lot of effort in making them, second I lost quite a good amount of mark-up and sales and lastly, I could not sell them the next day because they would not taste that good anymore so I had no choice but to eat them. My small chocolate truffles business did okay in the span of twelve days if I may say and it feels good to start something on your own, earn a little on your own. It feels good to see the fruit of your very own labor in your own hands. However, I still do not have my whole heart on this because being an entrepreneur is not part of my plans and goals. Although I can still do this business occasionally - whenever I receive orders and request but regularly? I doubt so. So that is practically all of it. Starting small and earning small is good and it feels nice and fulfilling as well because the fruit of your very own labor is right in front of you. With proper time management, dedication, effort, selling and promoting skills – a small business such as mine could turn out great in the long run. As they say, great things come from small beginnings.
  • 8. GENERAL JOURNAL 2012 Cash Dec. 22 Tinga, Capital 250 To record the initial investment of Tinga Inventory Cash 210 To record the purchases of ingredients Cash Sales 312 To record the sales for the day Cost of Sales Inventory 209.82 To record the cost of goods sold for the day Inventory Dec. 23 Cash 200 To record the purchase of ingredients Cash Sales 248 To record sales for the day Cost of Sales Inventory 166.78 To record the cost of goods sold Inventory Dec. 24 Cash 248 To record the purchase of ingredients Cash Sales 280
  • 9. To record sales for the day Cost of Sales Inventory 188.30 To record the cost of goods sold Inventory Dec. 26 Cash 327 To record the purchase of ingredients Cash Sales 304 To record sales for the day Cost of Sales Inventory 204.44 To record the cost of goods sold Inventory Dec. 27 Cash 280 To record the purchase of ingredients Cash Sales 184 To record sales for the day Cost of Sales Inventory 123.74 To record the cost of goods sold Consumption Expense Inventory 86.08 To record the consumption of unsold products for the day
  • 10. Purchases Dec. 28 Cash 172 To record the purchase of ingredients Cash Sales 224 To record sales for the day Cost of Sales Inventory 150.64 To record the cost of goods sold Inventory Dec. 29 Cash 268 To record the purchase of ingredients Cash Sales 256 To record the sales for the day Cost of Sales Inventory 172.16 To record the cost of goods sold Inventory Dec. 30 Cash 261 To record the purchase of ingredients Cash Sales 248 To record sales for the day Cost of Sales Inventory 166.78 To record the cost of goods sold
  • 11. Inventory Dec. 31 Cash 292 To record the purchase of ingredients Cash Sales 328 To record sales for the day Cost of Sales Inventory 225.96 To record the cost of goods sold 2013 Inventory Jan. 2 Cash 282 To record the purchase of ingredients Cash Sales 184 To record sales for the day Cost of Sales Inventory 123.74 To record the cost of goods sold Consumption Expense Inventory 96.84 To record the consumption of unsold goods for the day Inventory Jan. 3 Cash 192 To record the purchase of ingredients Cash Sales 232
  • 12. To record sales for the day Cost of Sales Inventory 156.02 To record the cost of goods sold Class Contribution Accounts Payable 120 To record proposed class contribution from profit Sales 2800 Cost of Sales 1888.38 Expenses 132.92 Income Summary 778.70 To close income and expenses Income Summary Tinga, Captial 778.70 To close the income summary account GENERAL LEDGER CASH 12-22-12 250 210 312 12-23-12 248 200 12-24-12 280 248 12-26-12 304 327 12-27-12 184 280
  • 13. 12-28-12 224 172 12-29-12 256 268 12-30-12 248 261 12-31-12 328 292 01-02-13 184 282 01-03-13 232 192 3050 2732 318 INVENTORY 12-22-12 210 209.82 12-23-12 200 166.78 12-24-12 248 188.30 12-26-12 327 204.44 12-27-12 280 209.82 12-28-12 172 150.64 12-29-12 268 172.16 12-30-12 261 166.78 12-31-12 292 225.96 01-02-13 282 220.58 01-03-13 192 156.02 2732 2071.30 660.70 ACCOUNTS PAYABLE 120 120
  • 14. CONSUMPTION EXPENSES 12-27-12 86.08 01-03-13 96.84 182.92
  • 15. NOTES – INCOME STATEMENT (1) Beginning Inventory 0 Purchases 2732php Goods Available For Sale 2732php Ending Inventory 660.70php Cost of Goods Sold 2071.30php (2) The consumption expenses for the dates December 27, 2012 and January 2, 2013 are actually goods that were not sold and rather consumed by me and my family. I decided not to sell them anymore the following day because the texture and moisture of the product will be affected if chilled overnight and will not taste as good as it should if it were fresh and it will be much harder to bite and chew. If put in the refrigerator rather than the freezer, the product will moist and may smell like the refrigerator which is not good since it could affect the image of my product when it comes to freshness; and I do not want to risk the quality of my product that could affect my profitability since I am still starting. These expenses are credited to the inventory account net of mark-up since it is the actual cost of the goods. However, even if it is deemed to have been sold, I am operating on a sole proprietor basis and these consumption expenses are rather personal and still could be reflected in my financial statements. (3) The cost of goods sold is net of the mark-up price and I believe that the higher the sales, the lesser the cost of goods sold since the profit margin mark-up absorbs the latter.
  • 16. NOTES – FINANCIAL POSITION (1) The aforementioned accounts payable reflects the class contribution that I will be participating in. Hence, I decided to get the money from the profit of this business since it would be better because I could already spare beforehand the contribution and avoid contingencies such as I might overspend and unwillingly spend the allotted contribution. (2) The inventories stated are deemed to be the remnants of the muscovado sugar, Milo and brown sugar. Hence, I no longer have finished goods on hand because as mentioned earlier, unsold and are already consumed by me and my family. Thus, there are also no more dark chocolates left since I melt everything I purchase so that I can convert it to finished goods – chocolate truffles. I do this so that I can make the most of what I have.
  • 17. PRODUCT PRICING 250php -210php = 40php 210php – ingredients used to make chocolate truffles. On the first day, I was able to make 78 chocolate truffles so... 210php/78pcs = 2.69php/chocolate truffle
  • 18. Selling price 4php Less: Unit Price 2.69php Total mark-up per unit 1.31php 48.70% mark-up on price Note: I decided to use the same unit price over the days during the operations to uniformity purposes.