Running head: ACCT 1160 TERM PROJECT 1

ACCT 1160 Term Project

Student’s Name: Kaur Jaismeen

ACCT 1160: Accounting Essentials (A10)

Term Project Dropbox

ACCT 1160 TERM PROJECT 2

The Company Name and Description

Business Name

The name of the business will be destiny boutique stores. This will refer to a collection where

many customers wish to experience the value of their money and look good.

Decsription Of The Business

The business name will be DESTINY BOUTIQUE STORES. It will be located in

Toronto. The business is both wholesale and retail dealing with new clothes, shoes and bags. At

commencement of the business extensive advertisement will be carried out to establish the

existence of the established city. This will include making it to be known by the targeted

customers, the operations, products and services offered by the business. Also market

penetration, pricing strategy will be adopted whereby low prices will be offered to attract the

attention of the customers.

Form Of Ownership

The potential business will be a sole proprietorship form of business where I will be the

managing director of the firm. The objective is to enjoy profits alone, to be the sole decision

maker and also to have easier ways of starting the business.

Products And Services

The business will be confined to the offering of goods services whenever they are

needed. The products will be new clothes like dresses, skirt suits, blouse, trousers, shirts, shoes,

bags, etc.

Industry
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The potential business falls in clothing and textile industry. Due to the growth of clothing

industry worldwide, the government has encouraged the investors to venture in and trade with

them. This paves the way for Destiny Boutique to trade with the industry and introduce quality

goods and services to the entire community.

Marketing Plan

This will provide the basis for business operation and financial plans of the business. The

proprietor will carry out a market survey to analyze its intended market and describe the market

opportunities.

Customer

 They are the people expected to be the buyers

 They can be regular customers, irregular customers, fixed customers and unpredictable

customers

Regular Customers

These are the customers who will frequently visit the shop to buy the clothes especially the ones

within the Embu market.

Irregular Customers

These are the customers who at inevitable circumstances are unable to visit our firm to purchase

clothes may be due to lack of money.

Fixed Customers
ACCT 1160 TERM PROJECT 4

These are the customers who will always stay by your side and will always buy from your firm,

e.g. the people working around Embu market.

Unpredictable Customers

This class of customers will include those from far places. Unless this customer makes an

order, they can't be supplied to them. They are unreliable since they can stay over two months

without purchasing from such a far place.

Organizational/Management Plan

Since it is a large firm that is claimed at mass income generation, the hierarchy of power

distribution is bureaucratic, whereby there is a hierarchy and a web of rules and regulations to

govern the work. By good planning to organization achieves their objectives in organizing and

controlling their resources. By good organization, the firm creates an environment to which

workers will be willingly participating to achieve the business objective.

Organization Structure

Destiny Boutique is a sole proprietorship kind of business. The managing director is the

business owner and will occupy the highest office in the firm. The manager will be assisted by

the operational manager to enhance smooth running of the business. However the other staff will

include; account clerk, secretary, sales, representative, computer operators, driver, and

watchman.

The diagram form includes;

ACCT 1160 TERM PROJECT 5

Managing director

Operation manager

Driver Secretary Watchman Account clerks Sale representative

Computer operator

Financial Plan

In this phase, the inflow and the outflow of financial and profit margin of the firm is

shown. It provides a tool for monitoring the financial performance of the business on continuous

basis. It shows the projection of current and future spending of money available in the business.

This will boost the growth of the business and survival in the market. Accomplishment of this is

achieved by preparation of the financial statement of the end of each year to enable the business

to start and remain in operation with proprietors achieving her goals both technical and

managerial skills to incorporate.

Pre-Operational Cost

These are costs incurred before the commencement of a business

Item Amount
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Tools and equipment 25,000

Office furniture 20,000

Transport 4,000

License 10,000

Advertisement 12,000

Electricity 2,000

Telephone 3,000

Water 200

Rent 12,000

Vehicle 35,000

Computer 80,000

Insurance (paid yearly) 10,000

Stationary 2,000

Internet subscription 4,000

Total 219,200
ACCT 1160 TERM PROJECT 7

The above amount will be required for the destiny boutique shop to commence

Working Capital Required

This is the estimation cost of operation of various expenses as business start. It is the difference

between current assets and current liabilities. Working capital will increase or decrease as the

business continuous.

Working capital = current assets – current liabilities

Particulars Year 2022 Year 2023 Year 2024

Current assets

Stock 300,000 250,000 200,000

Cash at bank 500,000 600,000 700,000

Cash at hand 420,000 550,000 600,000

Debtors 10,000 20,000 20,000

Total 1,230,000 1,420,000 1,520,000

Current liabilities

Creditors 700,000 650,000 500,000

Totals 700,000 650,000 500,000

Working capital 530,000 770,000 1,020,000

Proforma Income Statement

ACCT 1160 TERM PROJECT 8

This is a statement that helps the inventor in calculating profit and loss incurred at the end of

each business year.

PARTICULARS YEAR 2022 YEAR 2023 YEAR 2024

SALES 4,167,000 4,250,000 4,400,000
LESS COST OF SALES 682,000 720,000 780,000
GROSS PROFIT 3,485,000 3,530,000 3,620,000
EXPENSES
SALARIES 1,158,000 1,158,000 1,158,000
RENT 144,000 168,000 192,000
ELECTRICITY 24,000 24,000 24,000
LOAN PAYMENT 700,000 500,000 420,000
ADVERTISMENT 31,000 25,000 20,000
TELEPHONE 39,000 39,000 39,000
WATER 2,400 2,400 2,400
LICENSES 10,000 10,000 10,000
MAINATINANCE/REPAIR 40,000 50,000 55,000
TRANSPORT 54,500 60,000 60,000
SUBSCRIPTION 15,000 15,000 15,000
TOTAL EXPENSES 2,217,900 2,051,400 1,995,400
NET PROFIT BEFORE TAX 1,267,100 1,478,600 1,624,600
TAX PROVISION16%(VAT) 202,736 308,576 259,936
NET PROFIT AFTER TAX 1,064,364 1,170,024 1,364,664

PROFORMA BALANCE SHEET

It is the financial statement showing the strength of the firm in terms of finance at the end of

every year

DESTINY BOUTIQUE SHOP

PROFORMA BALANCE SHEET AS AT13ST DEC 2018

PARTICULARS YEAR 2022 YEAR 2023 YEAR 2024

ACCT 1160 TERM PROJECT 9

CURRENT ASSETS

STOCK 300,000 250,000 200,000

CASH AT HAND 500,000 600,000 700,000

CASH AT BANK 420,000 500,000 540,000

TOTAL CURRENT

ASSETS 1,220,000 1,350,000 1,440,000

FIXED ASSETS

EQUIPEMENT 480,000 480,000 480,000

VEHICLE 350,000 350,000 350,000

FURNITURE AND

FITTINGS 20,000 20,000 20,000

NON-CURRENT

ASSETS 500,000 520,000 550,000

TOTAL FIXED ASSETS 1,350,000 1,370,000 1,400,000

TOTAL ASSETS 2,570,000 2,720,000 2,840,000

CURRENT

LIABILITIES

OWNER'S CAPITAL 1,148,000 1,188,000 968,000

300,000 350,000 370,000

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TAX 202,000 202,000 202,000

TOTAL CURRENT

LIABILITIES 1,650,000 1,740,000 1,540,000

PERSONAL SAVINGS 220,000 230,000 250,000

CONTRIBUTIONS 0 0 0

TOTAL FIXED

LIABILITIES 220,000 250,000

LONG TERM

LIABILITIES

BANK LOAN 700,000 750,000 800,000

TOTAL LIABILITIES 2,570,000 2,720,000 2,840,000

PROFITABILITY RATIOS

Ratios deals with issues at the end of the firm’s profit in relation to the amount invested

6.6.1 Gross profit ratio (G.P.R)

G.P.R = Gross profit/sales X 100

Year 2022 G.P.R= 3,485,000/4,167,000 X 100 = 83.6%

Year 2023 G.P.R= 3,530,000/4,250,000 X 100 = 83.1%

Year 2024 G.P.R= 3,620,000/4,400,000 X 100 = 82.3%

ACCT 1160 TERM PROJECT 11

6.6.2 NET PROFIT RATIO

N.P.R = Net Profit Ratio before tax/ Sales X 100

Year 2022 N.P.R= 1,267,000/4,167,000 X 100 = 30.4%

Year 2023 N.P.R= 1,928,600/4,250,000 X 100 = 34.8%

Year 2024 N.P.R= 1,624,200/4,400,000 X 100 = 36.9%

DESIRED PRICING

PARTICULARS AMOUNT

Pre-operational costs 219,200

Working capital 530,000

Total 749,200

PROPOSED CAPITALIZATION

Total investment in the business shall be

Own contribution 1,148,000

Stock 300,000

Friends contribution 0

Total 1,448,000
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Payroll entry

Date Account Debit Credit

Wages expense 35,000

Social security payable 1000

Medicare payable 700

Federal withholding 500

payable

State withholding 500

payable

Cash 32,300