6.Fin Aspect - CHAPTER 6 Financial Aspect Basic Financial...

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Unformatted text preview: CHAPTER 6 Financial Aspect Basic Financial Assumptions 1. Petty Cash Fund of P8,000 under the imprest fund system will be replenished weekly. 2. There will be a P1,300,000 Revolving fund to be used for a year. 3. Depreciation will be as follows using the straight line method: Item Useful life Salvage Value Junk Shop Tools 3yrs 10% of cost Junk Shop Equipment 3yrs 10% of cost Office Equipment 5yrs 10% of cost Delivery Equipment 5yrs 10% of cost Office Furniture 5yrs 10% of cost Chapter 6: Financial Aspect 4. Upon full depreciation of an asset, it is stipulated to sell it and purchase a new one instead of continuous usage except for tools which are to be disposed without selling. 5. Suppliers of equipment and other assets are VAT registered. 6. Leasehold improvement will be depreciated using the straight line method, considering either the life of the lease contract or 5yrs---whichever is shorter. 7. Fire insurance will be P25,000 for all fixed assets. 8. Security deposit will be for 2 months and a 2 month advance. 9. Organization costs will be expensed in the first year. 10.Rent expense will be P45,000; 70% operating and 30% Administrative. 11.Utilities expense will increase 1% annually and to be allocated 40% Administrative and 60% Operating. 12.100% of sales and purchases will be on a cash basis. 13.No inventories of junks will be maintained. 14.There will be a 12% output tax on all items sold; no input tax on related purchases. 15.Income tax is 30% of net income. 16.Holiday pay, 13 th month pay and the likes are not considered in the projection of salaries. 17.Income taxes, VAT payable and expenses of the last month of the operating period are to be paid on the following year. 18.Partnership Agreement provides that distribution of net income will be: Salaries per month: General Manager P15,000 Page 2 Chapter 6: Financial Aspect Marketing Manager 15,000 Officer-In-Charge 15,000 Cashier 12,000 Accountant 12,000 Remaining balance will be shared equally among partners. 19.Withdrawals will be taken every year. 20.Discrepancies in the totals of the balance sheet are due to rounding off. Total Project Cost TOOLS and EQUIPMENT Schedul e COST Junk Shop Equipment 1 64919.42 Junkshop Tools 2 5,691. 96 Delivery Equipment 3 401785.7 Office Equipment 4 96,954. 45 Leasehold Improvement 5 335,586.00 Office Tools 6 1,329. 46 Deferred tax asset 69,511. 73 Total 975,778.7 2 PRE OPERATING COST Page 3 Chapter 6: Financial Aspect Feasibility study 5,500. 50 Organization cost 7 7,227. 50 Uniform 900. 00 Signage 2,500. 00 Total 16,128.0 0 SUPPLIES and other costs Office Supplies 8 2,981. 48 Store supplies 9 5,601. 49 Prepaid rent 90,000. 00 Rent deposit 90,000. 00 Fire insurance 25,000....
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6.Fin Aspect - CHAPTER 6 Financial Aspect Basic Financial...

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