PC CARTEL CYBERZONE

A Group Case Presented to the Accountancy Department De La Salle University In partial fulfillment Of the course requirements In ACTBAS2 C31 SUBMITTED BY: Tiangson, Bon Marie, M.

November 29, 2011

Merchandising means selling products to retail customers. Merchandisers, also called retailers, buy products from wholesalers and manufacturers, add a markup or gross profit amount, and sell the products to consumers at a higher price than what they paid. When you go to the mall, all the stores there are retailers, and you are a retail customer. In merchandising, there is the need to record inventory (all the goods for sale) and in accounting there are two methods in recording, as regards on which to use depends on the goods the firm sells.

Firms with numerous products that are priced relatively cheap for instance supermarkets, department stores and pharmacies are more likely to use the Periodic System, with this type of system checking of ending inventory happens once a year. For firms with expensive and countable products, such as firms selling, jewelry and luxury bags are more likely to use the Perpetual system which requires account balancing every after sale, this makes the ending balance accessible anytime.

I have interviewed two retailers Mr. Gilbert Biensito who is the proprietor PC Cartel (been open since 1999) and Ms. Pot Sanchez who is the manager of

Cyberzone (been open since 2004). They are both retailers of computers, laptops and computer accessories. Both firms are based in Dagupan, Pangasinan and both are VAT registered.

Cyberzone gets its merchandise from Mr. Biensito and it has been that way since the firm opened. Although, the firm sometimes buys coupon bond, photo paper, etc. at another firm, Marigold. Products are mostly delivered or picked up. Delivery cost is usually free if purchases exceed P5000.00 for the firm of Ms. Biensito. Marigold on the other hand, charges freight cost from 100 - 200 pesos

depending on the bulk. The owner of Cyberzone makes it a point to never buy on account, so payments are mostly cash basis and C.O.D. Freight costs did not take up a significant amount of the firms inventory since the proximity of Cyberzone from PC Cartel is small. As for discounts, most are indefinite. And sometimes none are given but Mr. Biensito makes sure to give freebies such as extra mouses. Freebies given depend on the amount of merchandise Cyberzone has ordered. Since Mr. Biensito is the supplier of Cyberzone, he did not disclose his suppliers name, but mentioned that one was from China and one was from Manila, he mentioned he changed suppliers recently. Products were mostly delivered to him and the costs were being shouldered by him. Also, the amount of the freight depends on the bulk of the products. The more the products, the lesser the amount. Freight do not take much of the inventory although it can amount up to P10,000.00 per accounting period. Suppliers are paid through cash basis or check. Merchandise purchased on account are usually payable with 6 months. Discounts could go up to 4%.

Both firms use the periodic inventory system and both records them manually. None of the firms have hired accountants, hence accounting operations are made by the owners. Since the firms use the periodic inventory system it is assumed that they check every end of the year. For PC Cartel though, those products that are relatively expensive are counted every after sale.

Manually recording the entries is not appropriate for the firms because as Ive noticed costumers are countless. And both of the firms inventories are already large. It would be better if they shift to a computerized accounting system to make their recording operations easier. Also, because they are selling computers which are relatively high priced, they should change their method of recording from

periodic to perpetual. Or perhaps for PC Cartel, they could have a separate accounting record one for merchandise having a price of P10000.00 and one to those that have lesser value (or anything with similar categorization).

Cyberzone, being a relatively small firm mentioned that household and their business is not a separate entity when it comes to financial matters and sometimes neglect to record withdrawals. I suggest that the firm must establish a distinction and must learn to incorporate the petty cash concept in the accounting method.

References: Simple studies. (2004). Retrieved from http://simplestudies.com/accounting-inmerchandising-companies.html Information about the firms are below: Business Name: PC CARTEL COMPUTER SHOP Country: Philippines State/City: Dagupan City, Pangasinan Address: Hufana Building Dagupan City, Pangasinan Short description of business: Computer and cellphone repair shop. Short description of products/services: PC Cartel Computer Shop offers computer sale, spare parts and accessories, cellphone unit and repair. http://www.pccartelcomputers.com/ Business Name: Cyberzone Country: Philippines Short description of business: Computer rentals and computer sales. Short description of products/services: Cyberzone offers computer sale, spare parts and accessories and rentals.