This office discussed with the Accounting Staff (AP, AR, Treasury and Majorem Acctg.Loans the Chart of Accounts and Significant accounting policies and Chart of Accounts. They are not aware of this
They are walking in the dark.They need light
Objectives:
1. To determine the eligibility of SBU to be granted additional benefits like the health card.;they must be profitable for the last 6 months to qualify;
2. To make the accounting staff be expert on the system and structure of accounting at Holy Gardens before attempting changes.;
3. To move the accounting staff to be more efficient: stricter on the expenses, and stingy on the discount, ME, and collection fee
4. To be aware of other opportunities for earning like service
Reality:
1. We do not know the latest financial statements from the chief accountant
2. We received the Jan Feb P N L which showed the SBUs making large sums of money and thus must be verified
Explanations
Some important concepts to be understood
1. Sale -
Cost
GP
Businesses must increase sales always: Sales can be increased by:
1. Increasing the channels
2. Price increase
3. Increase awareness
4. Increase the number of uses (or frequency, as with Starbucks, to
increase number of occasions to drink coffee)
5. Increase the value of the product
Decrease the cost:
1. Improve quality
2. Remove waste (MUDA)
3. Reduce labor cost
4. Reduce COGS
5. Outsource
Increasing the GP is incresing value added, increases value creation
2. Setting up a real estate company:
1 Cash/Cash in bank xxxx
Stockholders equity xxxx
2. Purchase of land xxxx
Cash/Loans xxxx
3. Set up inventory
Development cost xxx
Unexpended development cost xxxxx
Thus let us say we buy land at P350.00/ sm x 50,000 =
P16,500,000
Computing for development cost let us say P1,000/sm = P50,000,000
Total inventory / salable area = CGS
Saleable area = 50,000 x 65% = 32,500
Total inventory = P50,000,000 + 16,500,000 = 66,500,000/32,500
CGS = P2,078/sm
Lawn x 2.5 = P5,195
SSN x 10.00 sm = 20,078
GE x 30 = 62,340
4. Determine the GP rate vs SP
Thus:
TLP 100%
Less PC 17%
\
Insurance 4%
Collection fee 5%
Total 26%
Net sales 74%
Less VAT 12% - 8.88%
ME 20% 14.8
Total 23.68
Amount subject for JV 50.32
Say TLP = 36,000 x 50.32%
P18,000
Say 50% - 50% sharing 9,000
Less CGS 5,195
RGP/DGP 3,805
Thus our RGP per installment rate = 3,805/36,000 = 10.56%
5. Computing for RGP for installment sales
MA of P600.00 x 10.56 = P63.36
However, actually, our CGS is P3,500 /sm or P8,350
or DGP of only P9,000 - 8,350 = P650 only !!!
GP rate = 650,00 /36,000 = 1.8% only
RGP for installment sales (60 months to pay
P600 x 1.8% = ONLY P10.80!!!!
Thus: (CONCLUSION)
1. The PNL so submitted could be over stated
2. We have to be more efficient
3. The special plots sale is not sustainable, and does not make money
4. We make money on:
1. Regular plots
2. 20% dp, only 3 years to pay with interest
3. Services like PIS and PMS where there is no huge CGS
Please print and discuss with the Chief Accountant
What is your take on this?
--
Jorge U. Saguinsin
To "be the best, do your best, expect the best" always
N.B. The information contained herein are private and confidential in nature. The sender does not assume any damage that may arise from improper use of the email contained. ; especially if the information in this communication falls into the wrong hands causing damage and loss. to the company or any other parties.
