fin21_req

January 9, 2013

Mr. Devzon Porras, MSA, CPAFaculty of the College of Accounting EducationUniversity 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

Dec. 22

Cash

Tinga, Capital

To record the initial investment of Tinga

250

Inventory

Cash

To record the purchases of ingredients

210

Cash

Sales

To record the sales for the day

312

Cost of Sales

Inventory

To record the cost of goods sold for the day

209.82

Dec. 23

Inventory

Cash

To record the purchase of ingredients

200

Cash

Sales

To record sales for the day

248

Cost of Sales

Inventory

To record the cost of goods sold

166.78

Dec. 24

Inventory

Cash


248

Cash

Sales 280


Cost of Sales

Inventory


188.30

Dec. 26

Inventory

Cash


327

Cash

Sales


304

Cost of Sales

Inventory


204.44

Dec. 27

Inventory

Cash


280

Cash

Sales


184

Cost of Sales

Inventory


123.74

Consumption Expense

Inventory

To record the consumption of unsold

products for the day

86.08

Purchases

Dec. 28 Cash


172

Cash

Sales


224

Cost of Sales

Inventory


150.64

Dec. 29

Inventory

Cash


268

Cash

Sales

To record the sales for the day

256

Cost of Sales

Inventory


172.16

Dec. 30

Inventory

Cash


261

Cash

Sales


248

Cost of Sales

Inventory


166.78

Inventory

Dec. 31 Cash


292

Cash

Sales


328

Cost of Sales

Inventory


225.96

2013

Jan. 2

Inventory

Cash


282

Cash

Sales


184

Cost of Sales

Inventory


123.74

Consumption Expense

Inventory

To record the consumption of unsold goods

for the day

96.84

Jan. 3

Inventory

Cash


192

Cash

Sales


232

Cost of Sales

Inventory 156.02


Class Contribution

Accounts Payable

To record proposed class contribution from

profit

120

Sales

Cost of Sales

Expenses

Income Summary

To close income and expenses

2800

1888.38

132.92

778.70

Income Summary

Tinga, Captial

To close the income summary account

778.70

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.

fin21_req

Education

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