Student Lending Funds for a Business Plan

Student Life Generally Business Plan The business plan that is created is for an electronics retails store that will retail electronic merchandise. The main products that will be offered by the store will be Samsung electronic products which include Samsung tablets, laptops, computers, phones and related products and services. The name of the business will be Sunshine Electronics Retail Store. Sunshine store will be a franchise company for Samsung Inc. There are numerous benefits of being a franchise. These include: Operating under a renowned brand name that of Samsung Inc.

has major benefits. To begin with, the store enjoys increased security for your enterprise. Not only are the products being retailed already tried and tested, but the store will benefit from Samsung if there need be for improvements. More so, already a household name in the market, the store will not have any need to make a brand but will go straight into retailing. By being a franchise, Samsung Inc.

will not just abandon the store once it is set up as the company would not want its brand to be ruined. Aside from offering training programmes, store will also enjoy direct support from the company. The store will also be helped in finding and sustaining consumers as well as knowledge on how to institute stock control structures. iii.

Another benefit is that being a franchise store for a large company such as Samsung, the store will be able to obtain better and higher access to finance compared to other start businesses. For instance, the bank will be quite willing to give out loans or credit to the store (Kurtz and Boone, 2009). The store which will be a franchise will be run by a manager. This manager will be required to have more than ten years' worth of experience in the retail management sector.

Such proficiency of the industry and what is expected is necessary for the company to have profitability in terms of its operations in the first year of business. Aside from the manager, the store will also have a trained staff that will consist of ten salaried employees and five non-salaried employees. The salaried employees will be responsible for the inventory, marketing and sales of the products and services.

The non-salaried employees on the other hand will be responsible for the minor chores and duties and will be paid based on the number of hour they work. Chart Accounts 1. Asset Accounts No. Account Title Balance Type Explanation of Account Cash Debit Checking account balance from checks and currency received from clients but is yet to be deposited.

Accounts Receivable Debit These are monies owed to the company for the products sold and services provided but no payment yet Merchandise Inventory Debit This is the expense incurred for purchasing merchandise which is not yet sold. Supplies Debit Expenditure incurred for supplies which are yet to be used. The supplies expense account is used for supplies already used. Prepaid Insurance Debit Insurance expense that is paid before hand Prepaid Rent Debit Rent expense that is paid in advance.

The normal cost of rent is recorded in the rent expense account. 2. Liability Accounts No. Account Title Balance Type Explanation of Account Accounts payable Credit Amount of money owed to the suppliers who make provisions for goods and services for the store but are not paid in cash on delivery Notes payable Credit The amount of money in principal terms for promissory payment. Loans obtained from the banks are included here.

Interest payable Credit For the amount owed for interest on the principle amount up to the date of the balance sheet on the fiscal period. Wages payable Credit Amount that is owed to the workers of the store for the working hours completed but yet to be paid. 3. Operating Revenue Accounts Product Revenues Credit Amounts earned from retailing products to clients, either in credit or in cash. If sold in cash, this particular account increases and so does the cash account.

If sold on credit, this account increases and so does the accounts receivable account. Service Revenues Credit Amounts earned from providing services to clients, either in credit or in cash. If paid in cash, this particular account increases and so does the cash account. If paid on credit, this account increases and so does the accounts receivable account. 4. Operating Expense Accounts Wages expense Debit Cost incurred for work undertaken by non-salaried workers during the fiscal period.

Salaries expense Debit Cost incurred for work undertaken by salaried workers during the fiscal period. Rent expense Debit Expense for occupying the rented facilities for the fiscal period. Supplies expense Debit Expense for supplies in the fiscal period. Advertising expense Debit Expense incurred for promotions and advertisements and marketing during the fiscal period. Utilities expense Debit Expense for water, electricity, and sewer for the fiscal period. Pro forma Balance Sheet and Income Statement 1.

Pro forma Income Statement Sales 892,000 Cost of goods sold 54,320 Gross profit 837,680 Salaries 140,000 Selling expense 76,450 Utilities expense 13,750 Advertising expense 4,500 Rent expense 32,870 Other 9,800 Total expenses 277,370 Operating Profit 560,310 Income tax 224,124 Net Income 336,186 2. Pro forma Balance Sheet ASSETS Cash 48,000 Accounts receivable 92,000 Inventory 32,670 Supplies 13,240 Prepaid Insurance 5,730 Prepaid rent 22,600 214,240 LIABILITIES Accounts payable 122,540 Notes payable 50,000 Interest payable 8,500 Wages payable 33,200 214,240 Accounting Methods It is imperative to note that the retail store is based in the retail and consumer industry. The retail and consumer industry consists of three major contributors.

These are the consumer goods corporation or firm, the retailer and lastly the final consumer. The store which is the retailer serves as the link that exists between the consumer goods corporation and the final consumer. The convergence of the Generally Accepted Accounting Standards (GAAP) and the International Financial Reporting Standards (IFRS) will have a huge impact on accounting as whole. However, the major impact that would have impacted the store would have been through leases and the store does not lease any buildings (Ernst & Young, 2013).

Internal Control Recommendations One of the assets considered is inventory. The internal control recommendations for this aspect will be through inventory internal controls. The investment in inventory by Sunshine Electronics Retail Store is a big one and it might consist of a huge number of product items which can be easily embezzled or resold. This in turn implies that there is a great need for the execution of internal controls to preclude theft. Some of the internal controls for the inventory include: i. Counting the entire inventory coming in.

This ensures that errors are avoided in the inventory records. ii. Once this is done, the inventory coming in should be inspected. This is to ensure that the merchandise coming in is the right one and there is no damaged product or merchandise. iii. Another key aspect of internal inventory control will be to undertake reviews of inventory from time to point out some of the obsolete merchandise and also to free up storage space for new and incoming inventory. iv.

There has to be an employee who signs off on the products or merchandise that are removed or obtained from the warehouse. This is to increase the level of responsibility and also to avoid any instances of theft. v. If there are any instances of a negative inventory balance, it is important to undertake an investigation to find out exactly where the problem arises and rectify it (Trennery, 1999). Impact of the Regulatory Environment With the legislation of the.