Introduction

II. Results and Discussion a.) What is the name of the company? Is the company VAT-registered? The name of the two companies were Metro Soler Lights and Dcor and Handrich Sales Ventures. Both companies were VAT registered. b.) What merchandise does the business sell? The Metro Soler lights and Decors sells chandeliers and lighting fixtures while the Handrich Sale Ventures sells office and home funitures. c.) From whom does the business buy their merchandise? Is the relationship with the supplier/s new or longstanding? Metro Soler Lights and Decors have overseas suppliers and also in the local market. While in the Handrich Sales Ventures have specific suppliers from China and Malaysia and both of the companies stated that they have a longstanding relationship with their suppliers. d.) What are the FOB terms on purchases? Who pays the freight-the buyer or the seller? Is the freight a significant amount or is the freight cost low? What percentage of total inventory cost is the freight? For the Metro Soler Lights and Decors states that the terms vary in every supplier, sometimes it can be 30% - 50% down payment and the buyer is the one who pays for the freight. The interviewee also stated that the freight usually costs less than 10% of the total cost of the merchandise bought. For the Handrich Sales Ventures, the term for the FOB is 20% down payment FOB Destination Point which means the buyer is the one who pays for the freight. The amount of the freight depends on the location of the supplier. If the supplier is from urbanized areas or

from other countries it more expensive. The freight for the company is also usually less than 10%. e.) What are the credit terms on the purchases 2/10, n/30, or other? Does the business pay early to get purchase discounts? If so, why? If not, why not? The Metro Soler Lights and Decors stated that for overseas suppliers, the terms would be cash on delivery but for local suppliers, they would be given 90 days to pay but in some suppliers there are no purchase discounts that is why it doesnt matter for the company if they pay early or not. The Handrich Sales Ventures have no purchase discounts taken from the suppliers but they are given one to two weeks to pay for the merchandise purchased. f.) Does the business get quantity/trade discounts? What percentage is the discount? For the Metro Soler Lights and Decors, the company gets at most 40% of trade discounts but for the Handrich Sales Ventures, the company does not get trade discounts from their suppliers. g.) How does the business actually pay their suppliers? Do they mail a check or electronically or other? What is the actual payment procedure? The Metro Soler Lights and Decors pay their overseas supplier through telegraphic transfer but for the local suppliers, they pay through checks. Telegraphic transfer Sometimes referred to as a Telex Transfer or simply TT, the telegraphic transfer has long been a means of communication between banking institutions. In days gone by, the telegraphic transfer could be used to send money from an account in one bank to an account at a bank located anywhere else in the world. Generally, there were charges associated with the performance of a telegraphic transfer, with both the sender and the

recipient paying a small fee for the transaction. The same procedure of paying also applies to Handrich Sales Ventures. h.) What type of inventory system of the business use perpetual or periodic? For the Metro Soler Lights and Decors, the company uses a perpetual inventory system while for the Handrich Sales Ventures, the company uses a periodic inventory system. i.) Is the accounting system of the business computerized? If yes, then what accounting software is being used by the company? The Metro Soler Lights and Decors does not use an accounting system that is computerized while for the Handrich Sales Ventures uses a computerized accounting system. The software that they have been using is called Platinum j.) How often does the business take a physical count of its inventory? When during the year is the count taken? Describe the count procedure followed by the company. The Metro Soler Lights and Decors does a physical count of their inventory once a year, every midyear. The count procedure the company does is to count all remaining merchandise and puts it as merchandise inventory for the next accounting period. But for the Handrich Sales Ventures, they have a physical count every month and the count is taken every end of the month. Their procedure is to do physical count then compare with the stock card and the computer.

III. Conclusion/Recommendation After doing the interview with two companies which is an actual merchandising business, as a group, we learned that it is really very helpful to learn the basic accounting, may it be accounting for a service or manufacturing business or may it be accounting basics for merchandising. Without the background on the terms, processes and procedures, it can be bi difficult for the company to keep track of the business. As what we have learned, accounting is the language of business, so each company or business should really have an accountant of their own not only to monitor the business but also for legal purposes. From the interview, one company uses the perpetual accounting system while the other business uses the periodic accounting system. This left us all wondering because we think that they mixed it up. The business who said that they use the perpetual accounting system only does the physical count only once a year while the business who used the periodic accounting system stated that they do physical count every month which is more often than the business who stated that they use the perpetual accounting system for the merchandise inventory. If we were to suggest for the improvement for the next business cases for the next term would be that, add more questions or require the students have a picture taken with the interviewee in order to authenticate the interview process if it really have taken place.

Metro Soler Lights and Decors Handrich Sales Ventures

A Group Case Presented to the Accountancy Department De La Salle University

In partial fulfillment Of the course requirements In ACTBAS2 C34

SUBMITTED BY:
Katigbak, Marya Patricia Limqueco, Jenevieve Talledo, Alyssa Kaye M.

December 10, 2011