Feasibility_study-final.docx

CHAPTER I PROJECT SUMMARY

INTRODUCTION This chapter contains the details of the enterprise and the service being formulated. It includes the name of the enterprise, logo, vision and mission, location of the proposed business, project potential and proponents, project long range objectives as well as feasibility criteria. The highlights of the project are also discussed in this chapter which includes the history of the service, project time table and status, nature of industry, mode of financing and investment cost. Major assumptions and summary of findings will also be mentioned to show the overall feasibility of the project 1. Name of Enterprise NABAGO is the name of the enterprise. The proponents came up with NABAGO because of its meaning that means “reformed”, a strong business name that sets itself apart as alliterative, ardent and determined. Also, since it is catchy and easy to remember through the use of social medias which will help to attract customers. 2. Location of the Enterprise NABAGO Store is located along 3rd Floor Perez Bldg., 163 Lower Bonifacio St., Baguio City. This location is advantageous because it is located near Saint Louis University Main Campus and Housing Areas where large population of people are residing.

3. Business Logo

1|Page

The image above shows the logo of the proposed servicing business. The words, Bio Cleaning, Restoration and Repairs and Customization represent the three major bag services that the business is concentrated on and what the business is offering. The word, NABAGO is enclosed with a bag-shaped appearance which can be construed that the business is aiming to reform the bags of prospective customers. The bold and capitalized letters represent the determination and willingness to take risks and act efficiently and effectively in order to render useful, convenient, affordable and excellent customer services and create a golden chain of customer satisfaction. And, it also represents the courage to fulfill commitments. Lastly, the gaps or spaces on each letter of the word, NABAGO, constitute the adaptability of the business to changes and that in NABAGO, there is always a room for improvement. 4. Mission-Vision Mission To be instrumental in augmenting the quality of life of our customers, employees and shareholders. Vision To become the leading provider of useful, convenient, affordable and superior quality services throughout the Philippines to ensure achievement of awareness and availability of services to attain greater influence to have a competitive entry in the global market. 5. Feasibility Criteria The proponents contemplated profitability and service differentiation as the two main criteria of the project proposal. Profitability occurs when a business yields advantageous returns or results. Earning a profit allows a business to open other business locations and expand business operations. Moreover, being profitable means that the business would gain the ability to reward its owners with a large return on their investment. For businesses to be profitable, they use different types of business level strategies that can allow them to outperform rivals in their industry. One of the business level strategies that will be chosen and implemented by the business is differentiation strategy where it consists of creating differences in the business’ service offering by creating something that is perceived as 2|Page

unique and valued by customers. Since, there are only a few competitors in the bag service industry in Baguio City, the business can achieve differentiation by possessing three major services: Bio cleaning, Restoration and Repairs, and Customization, that competitors may only provide one thus leading to the creation of competitive advantage by means of providing convenience to the customers. And since the business will provide a useful, convenient, affordable and superior quality services, value creation can be achieved. Moreover, since bag services are not yet well-known in Baguio City, the proponents will take advantage of such thus leading to the creation of circumstances where the customers will perceive the business’ services unique. One of the measurements of the success of the business will be through profitability ratios in the financial portion of the study.

6. Project Potential and Proponent Since there are only a few businesses that cater bag-related services in Baguio City, the proponents decided to conduct a feasibility study on introducing this business. NABAGO Store will ensure that the service that will be provided are worth the payment since it offers convenience and great results for the customers. In doing this business, the proponents could give the satisfaction that customer are looking for and at the same time earning profit from it. The proponents of this project are Ma. Kaye E. Centeno, Joseph Clark P. Dela Torre, Mae Aileen A. Domingo and Jumairah D. Lopez. 7. Project’s Long-Range Objectives This shows how the proposed business envisions itself in the near future and how the proposed business will bring such into reality. The long-term objectives of NABAGO Store are as follows: 1. To be a well-known provider of service in town that will satisfy the needs of customers regarding their bags. 2. To be one of the best providers of bag related services by providing the best quality of service to the customers. 3. To expand the business by providing service that the business will offer in order to give customers a variety of services to choose from. 3|Page

4. To own machineries and equipment for faster rendering of services. 5. To provide employment to people who would want to work with us in achieving our objectives.

HIGHLIGHTS OF THE PROJECT 1. History of the Project An adversity once started it all. A song hymned with the lyrics, “It’s the season to be jolly…” but someone thought twice. Mae Aileen Domingo, one of the proponents, is at the brink of her enjoyment during the Christmas season, but was almost shattered when her precious and only bag was spilled with lots of soy sauce and vinegar- seems ready for an additional dish for Noche Buena. Since it is her only bag, and at the same time a gift from her mom, she badly wants to clean it up and restore it to its original appearance. Good thing, her friend, Ma. Kaye Centeno, also a proponent, came to rescue. She suggested that her “labandera” knows perfectly how to clean the messed-up bag but it will take her a week to fully clean it up. Since Mae Aileen had no other recourse, she just endured a week without a suitable bag to use. A week passed, finally, she can get her bag. But to her surprise, the bag didn’t look like how it used to be- colors faded, details deformed. At the spur of her search of something or at least someone who knows how to bring her bag back, she met Jumairah Lopez, the other proponent who is also in need of customization. The three noticed that there are numerous people who have the same need and want. They then gained the idea of putting up a bag related service enterprise in the city. Moreover, they discovered that Clark Dela Torre, also have an idea of putting such enterprise which was based from the moment when he recognized that there were only a few businesses providing such services in the city. These circumstances could have been something that’s only a part of the past. But because of creative minds that created the idea, it could be a part of history.

2. Project Timetable and Status A. Creation of Feasibility Study (January 01, 2018- May 31, 2018) – 5 months 4|Page

The designated period will be used to gather data and process it into information for the successful creation of the feasibility study. It should be done within 5 months so that other activities won’t be delayed. B. Procurement of Funds (June 01 2018- July 31, 2018) – 2 months After assessing the feasibility of the proposed business, the proponents will start to source out capital or funds. These funds will be used for the operations of the proposed business. C. Completion of Legal Requirements (August 01, 2018- September 31, 2018) – 2 months When funds are sourced out, the proponents should prepare the necessary documents and start to process as soon as possible the required permits to operate the business. Two months was allotted in order to provide an allowance in case of delays in the processing phase. D. Purchase of tools, equipment and supplies (October 01 2018- October 31, 2018) – 1 month This activity will be the inception of developing a good relationship with the proposed business potential supplier. One month is allotted to provide ample time to ensure that all supplies and equipment are purchased. E. Hiring of Employees (October 01, 2018- November 31, 2018) – 2 months This is done together with the purchase of materials and supplies at the first month but is given one longer month because hiring of employees could take longer time to complete. This will include finding applicants for the job, interviews, and trainings. F. Advertising (November 01, 2018- December 31, 2018) – 2 months Advertising is necessary in order to inform the public of the existence of the proposed business otherwise, people won’t know about it and no one would go to avail it. That is why 2 months is allotted before operations will formally start.

G. Start of Operations 5|Page

When everything’s well and done, the proposed business could formally start to render its services to the public. 3. Nature of the Industry NABAGO Store is under the service industry. NABAGO Store provides bag-related services including bio-cleaning, restoration and repairs and customization performed by experts who intricately performs the services. The business offers this kind of service because of the convenience it serves. 4. Mode of Financing Since the ownership of the business is a general partnership, all of the partners would put up the capital. Each partner will equally contribute an amount of P125,000.00 for a total of P500,000.00. Also, two of the partners are industrial which offers their expertise to the business as an investment. The capital contribution of each member will come from their personal savings. 5. Investment Cost The initial capital needed to start the enterprise operation is P367,445.085, however the partners decided to make it P500,000.00 the difference will be used for the expenses of the enterprise and the development of the enterprise for contingency fund. MAJOR ASSUMPTIONS AND SUMMARY OF THE PROJECT 1. Market Feasibility This aspect of the study is taking a look at the market side of introducing the service of NABAGO Store into the market. The NABAGO Store aims to be instrumental in augmenting the quality of life of our customers, employees and shareholders and to become the leading provider of useful, convenient, affordable and superior quality services throughout the Philippines to ensure achievement of awareness and availability of services to attain greater influence to have a competitive entry in the global market. NABAGO is a bag service enterprise who is dedicated on maintaining excellent customer service and meeting customer satisfaction. It offers a variety of

6|Page

useful, convenient, affordable and excellent customer services. There are three major services of the business (1) Bio Cleaning, (2) Restoration and repairs and (3) Customization. This study also tackles how much people are willing to avail if ever the service is introduced. A survey is conducted to know what prospective customers will think of the service. The survey shows that it is feasible to introduce the service in the market at a price based on the services that the customers will avail and the size of the bags of customer. The analysis for demand and supply shows favorable projected demand according to the data gathered. For supply analysis, there is no similar bag related service that has been offered in Baguio City from the past up until now. This means that there is no existing supply in the city. However, there would still be unsatisfied demand of 1,363,936, 1,385,400, 1,407,151, 1,429,243 and 1,451,682 for service for the years of 2019 to 2023. Factors like population growth, price and others affects the market of the service. This is also a vital stage whether to still continue or not and it is also involves the marketing strategy of the company to promote the service. This is not only to have a good profit but also concerned with the accessibility to the customers who want to avail the service. Market promotions will be done using Facebook advertising to spread the word about the service. 2. Technical Feasibility NABAGO Store will be located at 3rd Floor Perez Bldg., 163 Lower Bonifacio St., Baguio City, which is found near Saint Louis University. The business will operate for 288 days since the NABAGO store operates from Mondays to Saturdays, except holidays. The operations will start at 8:00 in the morning and will end at 5:00 in the afternoon, and the workers will be given one hour of lunch break. The business’ annual normal capacities computed per service are 9,165 for Bio Cleaning, 3,963 for Restoration and Repairs and 3,963 for Customization. The store will be occupying 90 square meters. The space is divided into seven different areas: the cleaning area, drying area, waiting area, restoration and repairs area, customization area, receiving area and an area designated for a comfort room. The areas for the major services are enough for the employees to

7|Page

work with their assigned task. The building is well-ventilated having enough windows and has a proper drainage system. Painting is to be made to fully furnish the area for its future operation. This study also provides the list of machinery and equipment, Furniture and fixtures, supplies, labor requirements etc. that will reflect in computing the project cost of the business. The project cost amounts to P390,685.085 which is inclusive of the costs of machinery and equipment, furniture and fixtures, supplies, rents, advertising and other necessary expenses. Financing will be coming from cash contributions of the partners. 3. Financial Feasibility This study will discuss the detailed information on project cost, initial capital requirements, financial statements, financial ratios and analysis and the sources of finance of the feasibility study. Based on the financial projections of the enterprise, it will have a net income of P755,138.21 on its first year and increasing net income of P848,924.46, P860,924.46, P877,118.75 and P897,621.77 for 2020, 2021, 2022 and 2023 respectively. The enterprise liquidity ratio: current ratios and acid test ratio indicate that the enterprise is very liquid as it has the ability to pay its current obligations. The leverage ratios show the financial stability to the business as operations will be able to continue without the need for debt financing. For its payback period, the enterprise will be able to recover its invested fund gradually for 5 months and 6 days and completely for the first year of its operations.

4.

Socio-Economic Feasibility This aspect of study presupposes the effects of our business to the welfare of our

economy, government, environment and society down to the community. It has always been reiterated that NABAGO Store aim is merely not to earn income but it also aims to provide the people useful, convenient, affordable and superior quality services throughout the Philippines to ensure achievement of awareness and availability of services to attain greater influence to have a competitive entry in the global market. Our company helps generate more income thus giving government the opportunity to earn as well through the taxes and city dues the company are required to pay.

People within the community will also be given job opportunities and

employment which helps lessen unemployment. The society would also experience the benefits our services have to offer. NABAGO Store also considers the welfare of the environment by 8|Page

complying to the Sanitation Code of the Philippine to maintain cleanliness and orderliness in and out of 5.

the company.

Management Feasibility Establishing an efficient management system is essential in a business organization to aid

the business potential and operation. NABAGO Store will be a general partnership run by 4 partners, with each bearing equal burdens and having equal rights in the management and profitability of the business. NABAGO Store adopts a general partnership setup organization because it is not a complex form of organization compared to a corporation. The business will hire residents of Baguio City. The business will hire a clerk and three personnel that has the expertise needed in the service, which will help NABAGO Store attain its goals and objectives. 6.

Accounting Information System Accounting information system collect and process transaction data which then are

turned into financial information for decision makers. All businesses whether small or large need to collect and process their financial data because such is essential in the business organization. The various forms and documents needed are also included for the organization to aid its accounting system. The accounting information aspect includes the different cycles in the business as well as internal controls deemed necessary in the communication of information. Having an effective accounting information system would help in delivering informative and accurate data in the production of various financial statements for the users.

9|Page

GHANT CHART

Activity

2018

2019

January February March April May June July Aug. Sept. Oct. Nov. Dec. January Feasibility Study Procurement of Funds Completion

of

Legal

Requirements Purchase of Tools and Equipment Hiring of Employees Advertising Start of Operation

10 | P a g e

CHAPTER II MARKET STUDY

INTRODUCTION The market study is considered the overall result of the enterprise. It aims to determine if the planned project can still breakthrough in the market and can continue to exist in a long period of time. Market study provides vital and relevant information to analyze the market needs and competition. This chapter contains the statistical analysis of the demand and supply of the proposed service being introduced as well as its properties, uses, prospective major users, and geographical areas of dispersion. Moreover, it includes the discussion and analysis of the demand and supply, price study, factors affecting the market and marketing program. A. SERVICE DESCRIPTION

1. Name of the Proposed Servicing Business Name is one of the most vital factors to be considered in starting a business. Ideally, the first factor that attracts potential customers is the name of the business. To be able to penetrate an industry, it has to possess an own identity that is unique, simple and easy to remember. The proponents have decided that the proposed service enterprise shall be known as NABAGO. It is simple yet unique and easy to remember especially it is a Filipino word that means “reformed”, a strong business name that sets itself apart as alliterative, ardent and determined.

2. Properties of the Service NABAGO is a bag service enterprise who is dedicated on maintaining excellent customer service and meeting customer satisfaction. It offers a variety of useful, convenient, affordable and excellent customer services. There are three major services of the business (1) Bio Cleaning, (2) Restoration and repairs and (3) Customization. The bio cleaning services, for purposes of this study, encompass removing of dirt, bacteria and fungus accumulated through daily use and 11 | P a g e

from humid weather, a disinfecting and deodorizing process to reduce unpleasant odors in your bags and degreasing. Restoration and repair services include treatment to damaged straps, zippers and fabric and also deals with problems in restoring of the original color. And for customization services, change of bag color, adding of snap buttons and embossing. 3. Uses of the Service NABAGO’s three major services are (a) Bio Cleaning, (b) Restoration and repairs and (c) Customization, the uses and relevance of those services are enumerated as follows: a) Bio Cleaning 

Reduce unpleasant odors



Removal of oil stains



Removal of dirt, bacteria and fungus



Minimize signs of aging

b) Restoration and repair 

Cover stains and abrasion



Strengthen straps



Length and color change of zippers



Finish of undone stitching



Color revival



Refreshment of bag

c) Customization 

Color change



Achieve fascinating arts and design

4. Major Users of the Service The proponents have decided to determine that the prospective users of the services are people who have used or old bags that are in need of the proposed servicing business’ three major services: Bio Cleaning, Restoration and Repairs and Customization and also, the proponents recognize and consider potential users who do not have used or old bags yet.

12 | P a g e

5. Geographical Areas of Dispersion NABAGO will only be available to its designated proposed location at 3rd Floor Perez Building, 163 Lower Bonifacio Street Baguio City but will then be provided to another accessible and convenient areas if favorable profits arise which are enough to cover its expansion and additional operations in the next years to come. Though, the center is situated in a single location, NABAGO, through the use of effective marketing efforts, will engage on social media network to create an interesting communication dynamic among customers. B. DEMAND AND SUPPLY ANALYSIS

1. Demand Demand refers to the willingness and ability to purchase a commodity or service wanted at a specified price and time. Demand Analysis is used to understand how much demand exists for a product or service. It helps determine whether a business can successfully enter a market and generate enough profits to advance its operations. A. The Market The target market of NABAGO bag laundry services are 18 years old and above who are fond of bags and or who wants to put some extra care on their bags. Demand and supply analysis in this matter is used in order to determine if the proposed business’ target market really needs the offered service. Customer preferences, quality requirements, and convenience were all considered in deciding the kind and type of services that NABAGO Store will offer.

13 | P a g e

B. Historical Data Table 1 Historical Individual Population Year

Population of 18 years old and above

2014

220,512

2015

223,908

2016

227,356

2017

230,857

2018

234,412 Source: Philippine Statistics Authority

Table 1 shows the historical individual population of the residents of Baguio City for the year 2014-2018. In order to get the latest population for 2018, the proponents used the annual growth rate of 1.54% which was provided by the Philippine Statistics Authority (PSA); multiplying it from the population of the year 2017 and adding the sum to the population of the year 2017 in order to get the population for 2018. = (230,857x1.54%) + 230,857 = 3,555.1978 + 230,857 = 234,412.1978 ~ 234,412 C. Sample Size The proponents floated 399.32~400 questionnaires based on the total population size of 362,485 (based on the individual population of Baguio City) as determined by Slovin’s formula. Through floating of questionnaires, the proponents were able to determine the demand for their service.

14 | P a g e

SLOVIN’S FORMULA To determine the sample size for the respondents, Slovin’s formula was used. n= N 1+Ne^2 Where: n = sample size representing the whole population N = total population e = 5% margin of error 2017 will be the base year n=

234,412 1 + (234,412) (.05) ^2

= 399.32~400 Survey questionnaires were produced and distributed based on the computed sample population.

D. Results of the Survey Table 2 Number of Respondents Who Have Used/Old Bags Respondent’s Answer

Number of Respondents

Percentage

YES

398

99.50%

NO

2

0.50%

400

100%

TOTAL

The table above shows that among the 400 respondents, 398 or 99.50% have used/ old bags. This means that almost all have used/ old bags.

15 | P a g e

Table 3 Bag Sizes of the Respondents Respondent’s Answer

Number of respondents

Percentage

EXTRA SMALL

107

13.77%

SMALL

217

27.93%

MEDIUM

257

33.08%

LARGE

129

16.60%

EXTRA LARGE

67

8.62%

TOTAL

777

100.00%

The table above shows that 257 respondents have medium sized bags or 33.08 % of the total number of bag sizes comprising the highest percentage. On the other hand, extra-large sized bags have the lowest share among all the bag sizes. Table 4 Number of respondents who have used/ old bags and are willing to avail the services Respondent’s Answer

Number of respondents

Percentage

YES

375

94.22%

NO

23

6.25%

TOTAL

398

100.00%

This table determines if there are really respondents who are willing to avail the services. Moreover, table 4 shows that 375 of the respondents are willing to avail the services of proposed servicing business which means that almost all or 94.22% of the respondents want to avail the offered services.

16 | P a g e

Table 5 Services that the respondents are willing to avail Respondent’s Answer

Number of respondents

Percentage

BIO-CLEANING

251

34.81%

RESTORATION AND

265

36.75%

CUSTOMIZATION

205

28.43%

TOTAL

721

100.00%

REPAIRS

This result shows the specific choice of service/ services that the respondents are willing to avail. Table 5 depicts that there is an almost fair distribution of the respondent’s willingness to avail between the three services. Moreover, more respondents want to avail of restoration and repairs, indicated by 265 respondents or 36.75%.

17 | P a g e

Table 6 Summary of the frequency of respondents availing the services

Bio-cleaning Number of

Percentage

respondents ONCE A

Restoration and repairs Number of

Percentage

respondents

Customization Number of

Percentage

respondents

49

19.52%

14

5.28%

11

5.37%

89

35.46%

64

24.15%

34

16.59%

27

10.76%

32

12.08%

21

10.24%

40

15.94%

95

35.85%

109

53.17%

39

15.54%

37

13.96%

19

9.27%

OTHERS

7

2.79%

23

8.68%

11

5.37%

TOTAL

251

100.00%

265

100.00%

205

100.00%

WEEK ONCE A MONTH TWICE A MONTH ONCE A YEAR TWICE A YEAR

Table 6 shows the cross tabulation of 375 respondents on how frequent they would avail bio-cleaning, restoration and repairs, and customization. This result will help the proponents know how often the market will avail their services which will then be the basis of annual availment rate and the projected demand subsequently. It showed that on a weekly, monthly, and semi-annual basis, bio-cleaning is availed the most. Meanwhile, restoration and repairs are availed most on a once a year and once a month. Lastly, customization is availed most on a yearly basis.

18 | P a g e

Table 7 Annualized Availing of Service Restoration and Frequency

Bio-Cleaning

Repairs

Customization

TOTAL

Once a week

2009

574

451

3034

Once a month

854

614.4

326

1795.2

Twice a month

518

614.4

403

1536

Once a year

40

95

109

244

Twice a year

78

74

38

190

Others

7

23

11

41

Total

3506.8

1994.8

1338.6

6840

Table 7 shows the annualized availment converted by multiplying the respondents answer to the equivalent operating time of the business in a year. This result is arrived at by using the frequency of availment of the respondents. It resulted into 6,840 annualized frequencies of availing in all three offered services. E. Historical Demand Historical demand gives a view on the past or existing demand of bag laundry services.

19 | P a g e

Table 8

Historical Demand Historical

Historical

Total

Annual

Historical

Demand-

Demand-

Historical

Percentage

Availment

Demand-Bio

Resto and

Customization

Demand

YEAR

Population

Availment

Rate

Cleaning

Repairs

2014

220,512

60.39%

9.487101248

220,512

439,779.68

464,309

359182.61

2015

223,908

60.39%

9.487101248

223,908

446,552.52

471,460

364714.21

2016

227,358

60.39%

9.487101248

227,358

453,433.05

478,724

370333.76

2017

230,857

60.39%

9.487101248

230,857

460,411.30

486,092

376033.14

2018

234,412

60.39%

9.487101248

234,412

467,501.24

493,577

381823.72

Table 8 shows the historical demand from year 2014- 2018. The historical demand is computed by multiplying the population to the percentage rate of respondents who are willing to avail bio-cleaning, restoration and repairs and customization services and the product of which, multiplied to the average annual consumption rate. Computation for Annual Availment Rate: Availment Weight = Total Annual Availment Total Number of services that the respondents are willing to avail = 6840 721 = 9.486823856 ~ 9.49 Therefore, the availment weight is 9.49.

This table represents that there is an increasing demand from 2014 to 2018.

20 | P a g e

Computation for Percentage Availment:

Percentage Availment = Total services that customers are willing to avail Total no. of respondents that are willing to avail the services = 721 (398*3) = 60.39%

F. Projected Demand Table 9 Projected Demand

YEAR

Population

Percentage Consumption

Annual

Projected

Consumptio

Demand-Bio

n

cleaning

Projected DemandRestoration and Repairs

Projected

TOTAL

Demand-

PROJECTED

Customization

DEMAND

2019

238,092

60.39%

9.487101248

474,841.01

501,326.17

387,818.36

1,363,985.54

2020

241,830

60.39%

9.487101248

482,296.02

509,196.99

393,907.11

1,385,400.11

2021

245,627

60.39%

9.487101248

489,868.06

517,191.38

400,091.45

1,407,150.89

2022

249,483

60.39%

9.487101248

497,558.99

525,311.29

406,372.88

1,429,243.16

2023

253,400

60.39%

9.487101248

505,370.67

533,558.67

412,752.94

1,451,682.28

Projected demand table shows the expected demand for years 2019- 2023. Like the historical demand, projected demand increases every year by an 0.0157 or 1.57 %. 2. Supply A. Historical Supply There is no similar bag related service that has been offered in Baguio City from the past up until now. This means that there is no existing supply in the city. People would tend to just wash their bags at home just like how they wash their clothes. In addition, given the fact that 21 | P a g e

Baguio City has a cold climate, bags, specially leathers, will often have molds. This being the situation, the owners of these bags would opt to just throw away the bags. B. Projected Supply The projection of supply actually depends on the existing or historical demand. Because of the absence of historical supply, there will also no projections that can be formulated. It means that a zero supply for the years 2019-2023 is being established. In this case, the projected demand is equal to unsatisfied demand because of nil supply. 3.

Demand-supply Analysis In order to determine whether the demand for bio-cleaning, restoration and repairs, and

customization, is satisfied or not, there should be a comparison between the projected demand and projected supply. The variance will either result to an unsatisfied demand or a satisfied demand. The favorable variance herein is the unsatisfied demand because it indicates that there are unfulfilled needs or wants of the consumers. Given this, NABAGO Store would be more than willing to offer its new services to the market.

Year

Projected

Projected

22 | P a g e

Projected

Total

Projected

Unsatisfied

Unsatisfied

Unsatisfied

Total

Demand-

Demand-

Demand-

Projected

Bio

Restoratio

Customiza

Demand

cleaning

n and

tion

Supply

Demand-

Demand-

Demand-

Unsatisfied

Bio

Restoration

Customizat

Demand

cleaning

and

ion

Repairs

Repairs

2019

474,841

501,326

387,818

1,363,986

0

474,841

501,326

387,818

1,363,986

2020

482,296

509,197

393,907

1,385,400

0

482,296

509,197

393,907

1,385,400

2021

489,868

517,191

400,091

1,407,151

0

489,868

517,191

400,091

1,407,151

2022

497,559

525,311

406,373

1,429,243

0

497,559

525,311

406,373

1,429,243

2023

505,371

533,559

412,753

1,451,682

0

505,371

533,559

412,753

1,451,682

Table 10

Demand- Supply Analysis Table 13 showed that unsatisfied demand is equal to the projected demand. This is because there are no existing competitors in Baguio City that can supply the existing demand. This means that the proposed business will have a material chance of entering the market because of the full share of unsatisfied demand with that of the projected demand. The unsatisfied demand will then be used to determine the market share of the proposed business.

C. PRICE STUDY Price is the amount for which a service is exchanged in the market and it is determined by the demand or supply of such service, it is one of most important factors that should considered. The price of the services will be based on the sizes of the bags the customers have and the services that the customers will avail from the enterprise. The table shows the selling price according to sizes alongside its availed service. The selling price will be equivalent to the cost multiplied by a starting markup of 5% for the extra small and as the size increases the markup also increases by an additional 15%.

Table 11 23 | P a g e

Extra

Small

Medium

Large

Extra Large

Small Bio-cleaning

P 80.00

P92.00

P103.00

P114.00

P126.00

Restoration & Repair

P94.00

P108.00

P121.00

P134.00

P148.00

Customization

P90.00

P102.00

P115.00

P128.00

P140.00

D. MARKETING PROGRAM Every businessperson, regardless of the type of organization they work for, wants content that drives traffic and helps build its audience. Nowadays, a lot of successful companies employ effective marketing efforts that help them to achieve its organizational goals. According to Lin Grensing-Pophal, author of "Marketing with the End in Mind." companies that take the time to specifically identify market segments and take steps to gather input through market research, one-on-one interactions and customer feedback, are likely to be successful in ensuring that everything they do is designed to resonate with their audience. In addition, one of the best marketing practices that most business have is access, it is the "place" part of the marketing mix. Consumers must be able to have ready accessibility to the products and services that they have a preference for. Access may mean a suitable location, convenient hours, front-desk staff who answer the phone quickly, and in today's era of technology, the ease of placing orders online. NABAGO is aiming to render useful, convenient, affordable and excellent customer services and to create a golden chain of satisfaction and referrals. Moreover, the business aims to achieve accessibility of services to customers by showing that availability and willingness to help customers whenever a problem arises are a top priority. The business is engaged in direct sales distribution which is beneficial because of having a high level of influence on the respective customer and knowing exactly how the customer feels about the services being rendered because of the presence of direct communication. And one of best strategies in direct sales distribution is engagement on social media which is a great tool for business. According to Leigh Richards, the best product at the best price that is readily available will still fail to achieve success if the target audience doesn't know it exists. Therefore, businesses must identify their desired market segments and select communication tools to reach 24 | P a g e

these markets at the right time and place. One of the communication platforms that the business will take advantage of is the widely known social media network because of the increasing number of social network users. Social media is an extremely effective way of getting the brand in front of lots of potential customers, as more people than ever before are using the Internet to find products and services. It also creates an interesting communication dynamic between businesses and their customers, as most information exchanged over these websites is instantly made public. With the help of social media, specifically when it comes to sharing content about the business itself or for content curation, promotion of services can be easily achieved by updating statuses, tweets or blog posts. The business will be engaging in Facebook advertising having Php 200.00 daily budget which according to Facebook Ads Manager, will have an estimated daily result pertaining to a reach of 3400-21000 people where it pertains to the number of people who have viewed or saw a post with or without the ad and a post engagement of 3301900 people which pertains to the number of people who perform actions on the page such as leaving a like, posting, clicking on a link or leaving a comment. The proposed servicing business is located at the 3rd Floor Perez Building, 163 Lower Bonifacio Street Baguio City which will be incurring a cost around Php 28,000.00 per month for rent. Table 12 Advertising Expense

P14,400.00

Rent Expense

P84,000.00

CHAPTER III 25 | P a g e

TECHNICAL STUDY

A. SERVICE PROCESS

Receiving of Bags

Segregation of Bags according to Category or washing/cleaning requirement

Bio cleaning

Restoration and Repairs

Bio cleaning 26 | P a g e

Customization

Segregate the bags according to the type of cleaning (3 minutes)

Wet Cleaning

Dry Cleaning

Put the bags in the washer (3 minutes)

Put the detergent powder and fabric conditioner in its designated container (1 minute)

Press the start button and wait for it to finish (40 minutes)

Identification of unpleasant odor, stains and dirt bacteria or fungus. (2 minutes)

Putting of dry cleaning fluid onto the bag. (1 minute)

Scrubbing the bag through the use of horse mane brush (5minutes)

Put the bags in the dryer (3 minutes)

Press the start button and wait for it to finish (10 minutes)

Get the bags out in the dryer and prepare it for packaging (5 minutes)

After packaging, put it in the bag shelves (3 minutes)

Restoration and Repairs 27 | P a g e

Restoration of fabric (adding of fabric to the damaged part of the bags), color revival (use of airbrush to bring back the original color of the bags, treatment of broken zipper and button and damaged strap (30 minutes)

Customization

Color change (use of airbrush to color the bags), adding of zipper and button and strap and embossing (heating of the iron stamp, stamping the patch and attaching it to the bag through stitching or direct stamping of the bag) (30 minutes)

In the waiting area, bags will be received by the clerk and it will be split and received by each of the workers designated to a particular major service, these major services, bio cleaning, restoration and repairs and customization, have their own respective areas. In the area for bio cleaning, bags will be segregated according to the type of cleaning, wet and dry cleaning. For the wet cleaning, the bags will be put in the washer and also, the detergent powder and fabric conditioner will be put into its designated container. Press the start button and wait for it to finish washing then the washed bags will be put in the dryer and after such, the bags now will be prepared for packaging and it will be placed in the bag shelves and for the dry cleaning, the bags will be scanned or reviewed and a dry cleaning fluid and horse mane brush will be used to remove the unpleasant odor, stains and dirt bacteria or fungus and after, the bags now will be prepared for packaging and it will be placed in the bag shelves. The total minutes of executing the bio cleaning service is 65 minutes for wet cleaning and16 minutes for dry cleaning. For the service, restoration and repairs, it will now have a combination of services, where these services are restoration of fabric by adding of fabric to the damaged part of the bag, color revival where the worker will use an airbrush to bring back the original color of the bag, repair of broken 28 | P a g e

zipper and button and damaged straps, this service will be performed in a total of 30 minutes. Lastly, for customization, the designated worker for such service will be engaging in changing of color through the use of airbrush, adding of zipper and button and strap and embossing, where the iron stamp that contains the design will be heated and it will be employed to stamp the patch and stitch it to the bag or directly stamp it to the bag. This is performed in a total of 30 minutes. B. LABOR REQUIREMENTS For the proposed servicing business, it will employ 4 employees: a clerk who is responsible for accompanying the customers and whom can also be the cashier and personnel of 3who will be responsible for the services that the store will render (bio-cleaning, restoration and repairs and customization. Each personnel will be given a minimum daily salary of Php400.00 except for the clerk who will be compensated at the amount of Php300.00. Daily Salary of the Clerk

P300.00 x 24 operating days

P7,200.00

Daily Salary of the 3 Personnel

P400.00 x 24 days x 3 personnel

P28,800.00

Total Daily Salary

P36,000.00

Add: Salary Benefits SSS

Clerk

(P218.00)

3 personnel (P345.20x3)

P218.00 P1,035.60

Pag-IBIG

P100.00 x 4 personnel

P400.00

PhilHealth

P275.00 x 4 personnel

P1,100.00

Total Monthly Salary

P38,753.60

Multiply by:

12

Total Annual Salary (excluding

P465,043.20

13th Month Pay 13th Month Pay: Clerk

P7,200.00

P7,200.00

personnel

P28,800.00

P28,800.00

TOTAL ANNUAL SALARY

C. OTHER SUPPLIES AND MATERIALS EXPENSE

29 | P a g e

P501,043.20

(Note 1)

Supplies

Detergent

Quanti

Unit

ty

Cost 50

Powder

Total Cost

P81.00/k P4,050.00

Purchased At Usage

Tiongsan

g

This is used in washing and thorough cleaning of the bags.

Fabric

25

Conditioner

P130.00/ P3,250.00

Tiongsan

1L

This is used to remove dirt,

stains

and

bad

smells. Dry Cleaning

50

Fluid

P110.00/ P5,500.00 1L

This is a type of fluid Lazada

that is used to clean a fabric or textile surface without water.

Degreaser

6

P300.00/ P1,800.00

Lazada

bottle

This is used to make your bag look like new and it makes your bag last longer.

Horse

Mane

4

Brush

P39.75/p P159.00

Ace Hardware This

c

is

scrubbing

used

for

off

and

removing dirt and stain. Essential Oils

10

P245.00/ P2,450.00

Lazada

bottle

This

is

used

penetrating

for and

conditioning

bags

prevent

cracking,

discoloration

to

and

scuffing with long term use. Fabric Glue

10

P250.00/ P2,500.00

5 Cents Up This is used as an

pc

Supermarket

adhesive when repairing or attaching hardware for customization.

Lint-free 30 | P a g e

10

P459.80/ P4,598.00

Ace Hardware This is a special type of

Cloth

pack

cleaning cloth that does not give up any fluff when used. It is useful for cleaning bags.

Sponge

6

P17.75/p P106.50

Tiongsan

c

This is a tool or cleaning aid consisting of soft, porous material. It is used

for

cleaning

impervious surfaces. Zipper

10

P6.50/ya P65.00

5 Cents Up This is used for binding

rd

Supermarket

and

replacement

for

damaged ones. Textile

4

Scissors Straps

10

P539.11/ P2,156.44

5 Cents Up This is used for cutting

pc

Supermarket

P75.00/y P750.00

5 Cents Up This is used as a handle

ard

Supermarket

fabrics and threads.

and as a replacement for the damaged ones.

Mallet

4

P165.00/ P660.00

Ace Hardware This is a large hammer

pc

used especially when putting hardware (studs, buttons, rivets, eyelets and etc.)

Lining Interlining

&

10

P2.50/ya P25.00

5 Cents Up Lining

rd

Supermarket

is

separately

constructed from

the

garment and attached at facing or hem areas by hand

or

machine.

Interlining is a fabric added

to

a

garment

when more warmth is needed. 31 | P a g e

Lace

10

P3.50/ya P350.00

5 Cents Up This is a fabric made of

rd

Supermarket

yarn or thread in an open web-like pattern.

Textile Paint

10

P332.00/ P3,320.00

Ace Hardware This is used in applying

1L Acrylic Paint

4

color to fabric.

P589.75/ P2,359.00

Ace Hardware This is used in applying

4L Skiving Knife

4

color to leather.

P810.00/ P3,240.00

5 Cents Up This is used in trimming

pc

Supermarket

the thickness of the leather or fabric to thin the material and make it easier to work with.

Thread

10

P33.00/r

P330.00

oll

5 Cents Up This is a long, thin Supermarket

strand of cotton, nylon, or other fibers used in sewing or weaving.

Needle

20

P340.00/ P6,800.00

5 Cents Up This is a very fine

pack

Supermarket

slender piece of metal with a point at one end and a hole or eye for thread at the other, used in sewing.

Fabric Dye

20

P849.00/ P16,980.00

5 Cents Up This is a natural or

bottle

Supermarket

synthetic substance used to add a color to or change the color of the material of the bag.

Buttons

100

P5.00/pc P500.00

5 Cents Up This is a small disk or Supermarket

knob

sewn

onto

a

garment, either to fasten it 32 | P a g e

by

being

pushed

through a slit made for the

purpose,

or

for

decoration. Stamp

50

P25.00/p P1,250.00

5 Cents Up This is used to impress a

c

Supermarket

pattern or mark on a fabric using an engraved or inked block or dye or another instrument.

Hole Puncher

4

P249.75/ P999.00

5 Cents Up This is a tool that is used

pc

Supermarket

to create holes on a fabric that will serve as an opening to attach hardware.

Studs

30

P50.00/p P1,500.00

5 Cents Up This is a large-headed

ack

Supermarket

piece

of

metal

that

pierces

and

projects

from

a

surface,

especially

for

decoration. Rivets

4

P291.00/ P1,164.00

5 Cents Up This is a short metal pin

pack

Supermarket

or

bolt

for

holding

together two plates of metal, its headless end being

beaten

out

or

pressed down when in place. Eyelets

4

P207.00/ P828.00

5 Cents Up This is a small hole

pack

Supermarket

ornamented stitching

with around

its

edge, used as a form of decoration 33 | P a g e

in

embroidery Clasps

150

P5.00/pc P750.00

5 Cents Up This is a device with Supermarket

interlocking parts used for

fastening

things

together. Hooks

30

P199.00/ P5,970.00

5 Cents Up This is a piece of metal

pack

Supermarket

or other hard material curved or bent back at an angle, for catching hold

of

things

or

on,

hanging a

thing

design. Beads

50

P30.00/p P1,500.00

5 Cents Up This

ack

Supermarket

is

a

small,

decorative object that is formed in a variety of shapes and sizes of a material such as stone, bone,

shell,

glass,

plastic, wood or pearl and with a small hole for threading or stringing. Tassel

5

P250.00/ P1,250.00

5 Cents Up This

roll

Supermarket

is

a

finishing

feature in fabric and clothing decoration.

Jewelry Glue

10

P520.00/ P5,200.00

5 Cents Up This

tube

Supermarket

ideal

permanently

for attaching

stones, gems, beads and most types of jewelry metals. Paint Brush

34 | P a g e

20

P16.75/p P335.00

5 Cents Up This is a brush used to

c

Supermarket

apply paint.

Magnetic

30

Lock

P189.00/ P5,670.00

5 Cents Up This is a device used to

pack

Supermarket

secure

or

bind

an

opening of a bag. Magic

10

Tape/Velcro

P18.00/y P180.00

5 Cents Up This is an adhesive tape

ard

Supermarket

made to fasten clothes or other items.

Propane Gas

2

P3,000.0 P6,000.00

This is attached to the

0/tank

dryer and used to create heat, but otherwise, used to help operate the same as an electric dryer

TOTAL

P94,544.94

3 Months Supplies: (P94,544.94 x 3/12) = P23,636.235

D. FURNITURE AND FIXTURES

Items

Quantity

(Note 2)

Unit Cost

Total Cost

Purchased At

Swivel Chair

1

P2,680.00

P2,680.00

Tiongsan Mabini

Long Sofa

1

P2,290.00

P2,290.00

Tiongsan Mabini

Table

4

P695.00

P2,780.00

Tiongsan Mabini

Chair

6

P100.00

P600.00

Tiongsan Mabini

Shelves

2

P4,375.00

P8,750.00

Tiongsan Mabini

TOTAL

35 | P a g e

P17,100.00

E. OFFICE SUPPLIES Supplies

(Note 3) Quantity

Unit Cost

Total Cost

Coupon Bond

4 rims

P150.00

P600.00

Ball Pen

2 boxes

P70.00

P140.00

Receipt

10

P100.00

P1,000.00

Calculator

1

P200.00

P200.00

TOTAL

P1,940.00 3 Months Office Supplies: (P1,940x 3/12) = P485.00

F. CLEANING SUPPLIES Supplies

(Note 4) Quantity

Unit Cost

Total Cost

4

P130.00

P520.00

3 rolls

P519.00

P1,557.00

Dust Pan

1

P45.00

P45.00

Trash Bin

2

P88.00

P176.00

Broom

1

P30.00

P30.00

Mop

1

P45.00

P45.00

Tissue (12pcs/pack) Garbage Bag

TOTAL

P2373.00 3 Months Cleaning Supplies: (P2373x 3/12) = P593.25

G. PACKAGING SUPPLIES Supplies Brown Paper Bag

(Note 5)

Quantity

Unit Cost

Total Cost

5

P1,258.00

P6,290.00

10

P15.00

P150.00

(1000pcs/pack) Tape TOTAL

P6,440.00 3 Months Packaging Supplies: (P6,440x 3/12) = P1,610.00

36 | P a g e

H. PLANT SIZE, PRODUCTION SCHEDULE AND FACILITIES The proposed servicing business has a 90 square meter floor plan. The space is divided into seven different areas: the cleaning area, drying area, waiting area, restoration and repairs area, customization area, receiving area and an area designated for a comfort room. The areas for the major services are enough for the employees to work with their assigned task. The building is well-ventilated having enough windows and has a proper drainage system. The business will be starting small and will be hiring 4 workers, one for clerical work and three for the services offered by the business. The company’s operation is from Mondays to Saturdays, except holidays. The operations will start at 8:00 in the morning and will end at 5:00 in the afternoon, and the workers will be given one hour of lunch break. Each worker will be given a wage of P400.00 except for the clerk who will be compensated at the amount of 300.00 and will approximately work for 288 days in a year, given that the average working day per month is 24 days. The maximum capacity that the proposed business can accept would be 7 bags for bio cleaning-wet cleaning and 30 bags for dry cleaning, 16 bags for restoration and repairs and 16 bags for customization per day. Computation of Normal Capacity: No. of Absences

24

No. of Fortuitous Events

16

Allowances for absences and fortuitous events

40

Number of operating days in a year Less: Allowances for absences and fortuitous events

288 40

Normal Capacity in days

248

Divide by: Number of operating days in a year

288

Percentage of Normal Capacity

86%

37 | P a g e

NORMAL CAPACITY Bio cleaning:

MAXIMUM CAPACITY

9,165

10,656

Wet cleaning

1,734

2,016

Dry cleaning

7,431

8,640

Restoration and repairs

3,963

4,608

Customization

3,963

4,608

TOTAL

17,091

19,872

Table 13

I. BUILDING The store is located at 3rd Floor Perez Building, 163 Lower Bonifacio Street, Baguio City. The building will be divided into different facilities such as cleaning area, drying area, waiting area, restoration and repairs area, customization area, receiving area and an area designated for a comfort room. The room on the 3rd floor of the building will be rented for P28,000 monthly. Painting is to be made to fully furnish the area for its future operation. J. MACHINERY & EQUIPMENT Items

(Note 6)

Quantity Unit Cost

Total Cost

Purchased At

Description

2

P23,850.00

SM Baguio,

An automatic

Appliance

washing machine

Center

that wash and spin

P11,925.00

laundry specifically bags. Washer

It can carry 6 kilograms of bags per wash.

38 | P a g e

2

P9,899.00

P19,798.00

SM Baguio,

This used to

Appliance

remove moisture

Center

from a load of bags, usually shortly after they are washed in a washing machine.

Dryer

It can carry 6 kilograms of bags per used. 1

P8,196.00

P8,196.00

SM Baguio,

This is used in

Appliance

drying the bags in

Center

dry cleaning. It also used for quickly removing wrinkles from

Steamer

fabrics. 1

P2,764.00

P2,764.00

SM Baguio,

A tool that sprays

Appliance

various media,

Center

most often paint but also ink and dye, and foundation by a

Airbrush

process of nebulization.

TOTAL

39 | P a g e

P54,608.00

K. UTILITIES REQUIRED

(Note 7)

ELECTRICITY Items

Kilowatt

Cost per

Daily

Number of

Hour Usage

Kilowatt

Electricity

Days

per day

hour

Consumption

Total Price

Cost Computer

16

P8.1432

P81.43

72

P5,862.96

Light

16

P8.1432

P122.15

72

P8,794.80

CCTV

24

P8.1432

P32.57

72

P2,345.04

TOTAL

P17,002.80

COMMUNICATIONS Items

Total Price

Telephone and Internet (inclusive of CCTV)

P 1,499.00

Number of Months

3

TOTAL

P 4,497.00

WATER Items

Cubic Meter

Cost per

Daily Water

Number of

Usage per

cubic meter

Consumption

Days

day

Total Price

Cost

Sink

.50

P81

P40.5

72

P2,916.00

Washer

2

P81

P162.00

72

P11,664.00

Bathroom

1

P81

P81.00

72

P5,832.00

TOTAL

40 | P a g e

P20,412.00

L. TAXES AND LICENSES

(Note 8)

BIR Registration

P500.00

SEC Registration

P1,010.00

Initial Tax

P2,500.00

Mayor’s Permit

P200.00

Sanitary Permit

P100.00

Certification Fee

P15.00

Documentary Stamp Tax

P15.00

Business Plate

P150.00

Fire Inspection Fee

P45.00

Tax Clearance and Certification Fee

P100.00

Barangay Business Clearance

P250.00

Sanitary Inspection Fee

P100.00

Sanitary Business Fee

P125.00

Business Cedula

P2,505.00

TOTAL TAXES AND LICENSES

P7,615.00

M. ADVERTISING EXPENSE Advertising Expense (P200x 72 days)

(Note 9) P14,400.00

N. FEASIBILITY COST Printing and Photocopying

(Note 10) P1,000.00

Transportation

P500.00

Book Binding

P1,000.00

TOTAL

P2,500.00

41 | P a g e

O. ORGANIZATION COST

(Note 11)

Filing of Articles of Partnership

P20,000.00

Notary of Articles of Partnership

P500.00

Research Fee

P200.00

Name Verification Fee

P40.00

TOTAL

P20,740.00

P. SALARIES EXPENSE

(Note 12)

Daily Salary of Clerk (300x24 days) x 3 mons

P21,600.00

Monthly Salary of the personnel (400x3) x24 days)

P86,400.00

x 3 mons Total 3 Month Salary

108,000.00

Add: Salary Benefits SSS: Clerk (218.00) + personnel (345.20x3) x 3

P3,760.80

mons Pag-IBIG (100x4) x 3 mons

P1,200.00

PhilHealth (275x4) x 3 mons

P3,300.00

TOTAL SALARY

P116,260.80

Q. RENT EXPENSE

(Note 13)

Monthly Rent

No. of Months

Total

P28,000.00

3

P84,000.00

42 | P a g e

R. PROJECT COST Other Supplies and Materials Expense

Note 1

P23,636.235

Furniture and Fixtures

Note 2

P17,100.00

Office Expense

Note 3

P485.00

Cleaning Expense

Note 4

P5,818.25

Packaging Expense

Note 5

P1,610.00

Machinery & Equipment

Note 6

P54,608.00

Utilities Expense

Note 7

P41,911.80

Taxes and Licenses

Note 8

P7,615.00

Advertising Expense

Note 9

P14,400.00

Feasibility Cost

Note 10

P2,500.00

Organization Cost

Note 11

P20,740.00

Salaries Expense

Note 12

P116,260.80

Rent Expense

Note 13

P84,000.00

TOTAL

P390,685.085

S. PLANT LOCATION

NABAGO STORE

43 | P a g e

The store is located at 3rd Floor Perez Building, 163 Lower Bonifacio Street, Baguio City. This location is advantageous because it is located near Saint Louis University Main Campus and Housing Areas where large population of people are residing.

T. PLANT LAYOUT

44 | P a g e

Bag Shelves

Office Table

Cabinets Sink

Washer

Front Desk Washer Dryer Dryer

Sewing Table

Paint Station

Customization Table

Waiting Area

U. WASTE DISPOSAL NABAGO will adhere to all environmental ordinance laws such as the Sanitation Code of the Philippines to maintain cleanliness and organize disposal of waste to avoid polluting the environment. The general requirements under the sanitation code of the Philippines (Chapter V): A. Structural Requirements 1. The site should be distant from sources of nuisance. 2. Only durable construction materials shall be used. 3. Smooth and water-tight materials shall be used for flooring. 4. All work rooms shall be properly ventilated and provided with 10 foot-candles of lighting. 5. Adequate drying facilities shall be provided and articles for drying protected from sources of contamination.

B. Sanitary Requirements 45 | P a g e

1. Supplies in both liquid and solid state shall be properly stored, prepared and handled. Containers of chemical shall be properly labeled. 2.

Employees shall be provided with potable drinking water, toilets and washing facilities.

3. Employees shall be provided with lockers for their working garments and street cloths. 4. The plant and its premises shall be maintained clean and sanitary at all items.

46 | P a g e

CHAPTER IV FINANCIAL STUDY

INTRODUCTION In this study, the major financial assumptions of the project are discussed. These assumptions serve as foundation for the study to determine if the service is profitable where different factors may affect the business. This chapter also presents Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Partners Equity and Statement of Cash flows. This chapter also presented the financial analyses, also the notes and schedules.

A. MAJOR ASSUMPTIONS 1. Service Price Price is the amount for which a service is exchanged in the market and it is determined by the demand or supply of such service, it is one of most important factors that should considered. The price of the services will be based on the sizes of the bags the customers have and the services that the customers will avail from the enterprise. The table shows the selling price according to sizes alongside its availed service. The selling price will be equivalent to the cost, exclusive of VAT multiplied by a starting markup of 5% for the extra small and as the size increases the markup also increases by an additional 15%.

Extra Small

Small

Medium

Large

Extra Large

Bio-cleaning

P 80.00

P92.00

P103.00

P114.00

P126.00

Restoration & Repair

P94.00

P108.00

P121.00

P134.00

P148.00

Customization

P90.00

P102.00

P115.00

P128.00

P140.00

Table 14

47 | P a g e

2. Operating Expenses

A. Advertising Expense Advertisement will cost P200.00 per day prior and on the start of the operations to introduce the proposed business to the public. The proposed business will be engaging in Facebook advertising.

B. Rent expense The expenditure for rent is P28,000.00 monthly; the enterprise will pay for one-month advance and one deposit as for the agreement.

C. Communication Expense The telecommunication expense is P1,499.00 for each month, this is inclusive of Wi-Fi router for internet connection, telephone for the business transactions and CCTV for security.

D. Depreciation Expense The proposed business will use the straight-line method in depreciating its assets. All the business’s machineries and furniture and fixtures are estimated to have a 5- year useful life and no residual value will be assumed.

E. Utilities Expense The utilities expense is P12,471.60 per month. This is comprised of light expenses for P5667.60 and water expenses for P6804.00.

F. Sales The proposed business will be engaging in direct selling in Baguio City. There will also be a yearly increase of 1% in Sales and Cost of Service.

G. Cash

48 | P a g e

Total withdrawals of 80% will be placed in the bank, 15% will be cash in bank and 5% will serve as petty cash H. Withdrawals The partners agreed percentage of share in net income will be 30 % for 2 of the industrial partner and 20% for the remaining partners and withdrawals will be 20% of capital beg. and share in net income every year to serve as their compensation at every end of the year.

I. Mode of Financing The partners of NABAGO Store will contribute a total of 500,000.00. It is expected to cover the start-up costs of the proposed business costing P390,685.085 comprised of needed supplies, equipment, rental payments and the like. Each of the partners will contribute cash that has a total amount of P125,000.00 and the said contribution will be coming from their personal savings.

49 | P a g e

NABAGO Store

Statement of Comprehensive Income For the Years Ended December 31, 2019-2023

Notes

2019

2020

2021

2022

2023

Service Revenue

1

2,296,134.00

2,330,316.00

2,347,407.00

2,372,424.00

2,402,643.00

Less: Cost of Service

2

90,165.13

91,066.78

91,977.45

92,897.21

93,826.19

2,205,968.87

2,239,249.22

2,255,429.45

2,279,526.79

2,308,816.81

1,127,200.00

1,026,500.00

1,026,500.00

1,026,500.00

1,026,500.00

1,078,768.87

1,212,749.22

1,228,929.55

1,253,026.79

1,282,316.81

Less: Income Tax (30%)

323,630.66

363,824.77

368,678.87

375,908.04

384,695.04

Net Operating Income

755,138.21

848,924.46

860,250.69

877,118.75

897,621.77

Gross Income Less: Operating Expenses Net income before Tax

50 | P a g e

3

Note 1- Service Revenue Service

Sched

2019

2020

2021

2022

2023

Bio Cleaning

1

1,154,790

1,173,120

1,182,285

1,191,450

1,209,780

Restoration and Repairs

2

586,524

594,450

598,413

606,339

614,265

Customization

3

554,820

562,746

566,709

574,635

578,598

2,296,134.00

2,330,316.00

2,347,407.00

2,372,424.00

2,402,643.00

Sched

2019

2020

2021

2022

2023

Other Supplies and Materials Expense

4

94,544.94

95,490.39

96,445.29

97,409.74

98,383.84

Packaging Supplies Expense

5

6,440.00

6,504.40

6,569.45

6,635.14

6,701.49

Total

100.984.94

101,994.79

103,014.74

104,044.88

105,085.33

Less: VAT (12%)

10,819.82

10,928.01

11,037.29

11,147.67

11,259.14

Cost of Service, exclusive of VAT

90,165.13

91,066.78

91,977.45

92,897.21

93,826.19

TOTAL Note 2 – Cost of Service Service

51 | P a g e

Note 3- Operating Expenses Schedule

2019

2020

2021

2022

2023

Office Supplies Expense

6

1,940.00

1,740.00

1,740.00

1,740.00

1,740.00

Cleaning Supplies Expense

7

2,373.00

2,373.00

2,373.00

2,373.00

2,373.00

Rent Expense

8

336,000.00

336,000.00

336,000.00

336,000.00

336,000.00

Utilities Expense

9

149,659.20

149,659.20

149,659.20

149,659.20

149,659.20

Communication Expense

10

17,988.00

17,988.00

17,988.00

17,988.00

17,988.00

Feasibility Cost

11

2,500.00

-

-

-

-

Organization Cost

12

20,740.00

-

-

-

-

Salaries Expense

13

501,043.20

501,043.20

501,043.20

501,043.20

501,043.20

Advertising Expense

14

73,000.00

-

-

-

-

Taxes and licenses

15

7,615.00

3,355.00

3,355.00

3,355.00

3,355.00

Depreciation Expense

16

14,341.60

14,341.60

14,341.60

14,341.60

14,341.60

1,127,200.00

1,026,500.00

1,026,500.00

1,026,500.00

1,026,500.00

TOTAL

52 | P a g e

Schedule 1: Bio Cleaning Service Selling Price Normal Capacity

TOTAL

2019

2020

2021

2022

2023

126

128

129

130

132

9,165

9,165

9,165

9,165

9,165

1,154,790

1,173,120

1,182,285

1,191,450

1,209,780

2019

2020

2021

2022

2023

148

150

151

153

155

3,963

3,963

3,963

3,963

3,963

586,524

594,450

598,413

606,339

614,265

Schedule 2: Restoration and Repairs Service Selling Price Normal Capacity TOTAL

53 | P a g e

Schedule 3: Customization Service Selling Price Normal Capacity TOTAL

2019

2020

2021

2022

2023

140

142

143

145

146

3,963

3,963

3,963

3,963

3,963

554,820

562,746

566,709

574,635

578,598

Schedule 4 – Other Supplies and Materials Expense Supplies

Quantity

Unit Cost

2019

2020

2021

2022

2023

Detergent Powder

50

P81.00/kg

4,050.00

4,050.00

4,050.00

4,050.00

4,050.00

Fabric Conditioner

25

P130.00/1L

3,250.00

3,250.00

3,250.00

3,250.00

3,250.00

Dry Fluid

50

P110.00/1L

5,500.00

5,500.00

5,500.00

5,500.00

5,500.00

6

P300.00/bottle

1,800.00

1,800.00

1,800.00

1,800.00

1,800.00

Cleaning

Degreaser

54 | P a g e

Horse Brush

Mane

4

P39.75/pc

159.00

159.00

159.00

159.00

159.00

Essential Oils

10

P245.00/bottle

2,450.00

2,450.00

2,450.00

2,450.00

2,450.00

Fabric Glue

10

P250.00/pc

2,500.00

2,500.00

2,500.00

2,500.00

2,500.00

Lint-free Cloth

10

P459.80/pack

4,598.00

4,598.00

4,598.00

4,598.00

4,598.00

Sponge

6

P17.75/ pc

106.50

106.50

106.50

106.50

106.50

Zipper

10

P6.50/ yard

65.00

65.00

65.00

65.00

65.00

Textile Scissors

4

P539.11/pc

2,156.44

2,156.44

2,156.44

2,156.44

2,156.44

Straps

10

P75.00/ yard

750.00

750.00

750.00

750.00

750.00

Mallet

4

P165.00/pc

660.00

660.00

660.00

660.00

660.00

10

P2.50/ yard

25.00

25.00

25.00

25.00

25.00

Lace

10

P3.50/ yard

350.00

350.00

350.00

350.00

350.00

Textile Paint

10

P332.00/1L

3,320.00

3,320.00

3,320.00

3,320.00

3,320.00

Acrylic Paint

4

P589.75/4L

2,359.00

2,359.00

2,359.00

2,359.00

2,359.00

Lining Interlining

55 | P a g e

&

Skiving Knife

4

P810.00/pc

3,240.00

3,240.00

3,240.00

3,240.00

3,240.00

Thread

10

P33.00/ roll

330.00

330.00

330.00

330.00

330.00

Needle

20

P340.00/pack

6,800.00

6,800.00

6,800.00

6,800.00

6,800.00

Fabric Dye

20

P849.00/bottle

16,980.00

16,980.00

16,980.00

16,980.00

16,980.00

Buttons

100

P5.00/ pc

500.00

500.00

500.00

500.00

500.00

Stamp

50

P25.00/ pc

1,250.00

1,250.00

1,250.00

1,250.00

1,250.00

Hole Puncher

4

P249.75/pc

999.00

999.00

999.00

999.00

999.00

Studs

30

P50.00/ pack

1,500.00

1,500.00

1,500.00

1,500.00

1,500.00

Rivets

4

P291.00/pack

1,164.00

1,164.00

1,164.00

1,164.00

1,164.00

Eyelets

4

P207.00/pack

828.00

828.00

828.00

828.00

828.00

Clasps

150

P5.00/pc

750.00

750.00

750.00

750.00

750.00

Hooks

30

P199.00/pack

5,970.00

5,970.00

5,970.00

5,970.00

5,970.00

Beads

50

P30.00/ pack

1,500.00

1,500.00

1,500.00

1,500.00

1,500.00

Tassel

5

P250.00/roll

1,250.00

1,250.00

1,250.00

1,250.00

1,250.00

Jewelry Glue

10

P520.00/ tube

5,200.00

5,200.00

5,200.00

5,200.00

5,200.00

56 | P a g e

Paint Brush

20

P16.75/ pc

335.00

335.00

335.00

335.00

335.00

Magnetic Lock

30

P189.00/pack

5,670.00

5,670.00

5,670.00

5,670.00

5,670.00

Magic Tape/Velcro

10

P18.00 /yard

180.00

180.00

180.00

180.00

180.00

Propane Gas

2

P3,000.00/tank

6,000.00

6,000.00

6,000.00

6,000.00

6,000.00

94,544.94

94,544.94

94,544.94

94,544.94

94,544.94

Unit Cost

2019

2020

2021

2022

2023

TOTAL

Schedule 5– Packaging Supplies Expense Supplies

Quantity

Brown Paper Bag (1000pcs/pack)

5

P1,258.00

6,290.00

6,290.00

6,290.00

6,290.00

6,290.00

Tape

10

P15.00

150.00

150.00

150.00

150.00

150.00

6,440.00

6,440.00

6,440.00

6,440.00

6,440.00

TOTAL

57 | P a g e

Schedule 6 - Office Expenses Supplies

Quantity

Unit Cost

2019

2020

2021

2022

2023

Coupon Bond

4 rims

P150.00

600.00

600.00

600.00

600.00

600.00

Ball Pen

2 boxes

P70.00

140.00

140.00

140.00

140.00

140.00

Receipt

10

P100.00

1,000.00

1,000.00

1,000.00

1,000.00

1,000.00

Calculator

1

P200.00

200.00

-

-

-

-

1,940.00

1,740.00

1,740.00

1,740.00

1,740.00

Unit Cost

2019

2020

2021

2022

2023

4

P130.00

520.00

520.00

520.00

520.00

520.00

3 rolls

P519.00

1,557.00

1,557.00

1,557.00

1,557.00

1,557.00

Dust Pan

1

P45.00

45.00

45.00

45.00

45.00

45.00

Trash Bin

2

P88.00

176.00

176.00

176.00

176.00

176.00

Broom

1

P30.00

30.00

30.00

30.00

30.00

30.00

Mop

1

P45.00

45.00

45.00

45.00

45.00

45.00

2,373.00

2,373.00

2,373.00

2,373.00

2,373.00

TOTAL

Schedule 7– Cleaning Expenses Supplies Tissue (12pcs/pack) Garbage Bag

TOTAL 58 | P a g e

Quantity

Schedule 8 – Rent Expense Rent

2019

2020

2021

2022

2023

28,000.00 per month

336,000.00

336,000.00

336,000.00

336,000.00

336,000.00

TOTAL

336,000.00

336,000.00

336,000.00

336,000.00

336,000.00

Schedule 9 – Utilities Expense Utilities

Monthly Expense

2019

2020

2021

2022

2023

Electricity

5,667.60

68,011.20

68,011.20

68,011.20

68,011.20

68,011.20

Water

6,804.00

81,648.00

81,648.00

81,648.00

81,648.00

81,648.00

149,659.20

149,659.20

149,659.20

149,659.20

149,659.20

TOTAL

Schedule 10–Communication Expense

Telephone and Internet (inclusive of CCTV) TOTAL 59 | P a g e

Monthly Expense

2019

2020

2021

2022

2023

1,499.00

17,988.00

17,988.00

17,988.00

17,988.00

17,988.00

17,988.00

17,988.00

17,988.00

17,988.00

17,988.00

Schedule 11-Feasibility Cost 2019 1,000.00

2020 -

2021 -

2022 -

2023 -

Transportation

500.00

-

-

-

-

Book Binding

1,000.00

-

-

-

Printing and photocopying

Total

-

-

-

-

2,500.00

Schedule 12-Organization Cost Filing for Articles of Partnership

2019 20,000.00

2020 -

2021 -

2022 -

2023 -

Notary of Articles of Partnership

500.00

-

-

-

-

Research Fee

200.00

Name Verification Fee

40.00 -

-

-

-

Total

60 | P a g e

20,740.00

Schedule 13- Salaries Expense Daily Salary of Clerk (300x24 days)

P7,200.00

Monthly Salary of the Personnel (400x3) x24 days)

28,800.00

Total Daily Salary

36,000.00

Add: Salary Benefits SSS: Clerk (218.00) + Personnel (345.20x3)

1253.60

Pag-IBIG (100x4)

400.00

PhilHealth (275x4)

1,100.00

Total

38,753.60

Multiply by: Months in a year Total Annual Salary (excluding 13th month pay) Add: 13th Month Pay Total Salaries Expense

12 465,043.20 36,000 501,043.20

Schedule 14 – Advertising Expense 2019 Facebook Advertisement (P200 per day)

73,000.00

TOTAL

73,000.00

61 | P a g e

Schedule 15- Taxes and Licenses Taxes and Licenses

2019

2019

2021

2022

2023

BIR Registration

500.00

-

-

-

-

SEC Registration

1,010.00

-

-

-

-

Initial Tax

2,500.00

-

-

-

-

Mayor’s Permit

200.00

200.00

200.00

200.00

200.00

Sanitary Permit

100.00

100.00

100.00

100.00

100.00

Certification Fee

15.00

15.00

15.00

15.00

15.00

Documentary Stamp Tax

15.00

15.00

15.00

15.00

15.00

Business Plate

150.00

150.00

150.00

150.00

150.00

Fire Inspection Fee

45.00

45.00

45.00

45.00

45.00

Tax Clearance and Certification Fee

100.00

100.00

100.00

100.00

100.00

Barangay Business Clearance

250.00

-

-

-

-

Sanitary Inspection Fee

100.00

100.00

100.00

100.00

100.00

Sanitary Business Fee

125.00

125.00

125.00

125.00

125.00

Business Cedula

2,505.00

2,505.00

2,505.00

2,505.00

2,505.00

TOTAL

7,615.00

3,355.00

3,355.00

3,355.00

3,355.00

62 | P a g e

Schedule 16 – Depreciation Expense Cost

2019

2020

2021

2022

2023

Washer

23,850.00

4,770.00

4,770.00

4,770.00

4,770.00

4,770.00

Dryer

19,798.00

3,959.60

3,959.60

3,959.60

3,959.60

3,959.60

Steamer

8,196.00

1,639.20

1,639.20

1,639.20

1,639.20

1,639.20

Airbrush

2,764.00

552.80

552.80

552.80

552.80

552.80

10,921.60

10,921.60

10,921.60

10,921.60

10,921.60

Machinery and Equipment:

Total Furniture and Fixtures: Swivel Chair

2,680.00

536.00

536.00

536.00

536.00

536.00

Long Sofa

2,290.00

458.00

458.00

458.00

458.00

458.00

Table

2,780.00

556.00

556.00

556.00

556.00

556.00

Chair

600.00

120.00

120.00

120.00

120.00

120.00

8,750.00

1,750.00

1,750.00

1,750.00

1,750.00

1,750.00

Total

3,420.00

3,420.00

3,420.00

3,420.00

3,420.00

TOTAL

14,341.60

14,341.60

14,341.60

14,341.60

14,341.60

Shelves

63 | P a g e

NABAGO Store Statement of Changes in Partners Equity For the Year Ended December 31, 2019-2023

2019

2020

2021

2022

2023

125,000

281,233.17

428,728.40

549,442.88

650,062.80

Add: Share in Net Income (30%)

226,541.46

254,677.34

258,075.21

263,135.63

269,286.53

Total

351,541.46

535,910.51

686,803.61

812,578.51

919,349.33

Less: Withdrawals (20%)

70,308.29

107,182.10

137,360.72

162,515.70

183,869.87

Capital, end

281,233.17

428,728.41

549,442.89

650,062.81

735,479.47

125,000

281,233.17

428,728.40

549,442.88

650,062.80

Add: Share in Net Income (30%)

226,541.46

254,677.34

258,075.21

263,135.63

269,286.53

Total

351,541.46

535,910.51

686,803.61

812,578.51

919,349.33

Less: Withdrawals (20%)

70,308.29

107,182.10

137,360.72

162,515.70

183,869.87

Capital, end

281,233.17

428,728.41

549,442.89

650,062.81

735,479.47

Centeno, Capital Capital, beginning

Dela Torre, Capital Capital, beginning

64 | P a g e

2019

2020

2021

2022

2023

125,000

220,822.11

312,485.60

387,628.59

450,441.87

Add: Share in Net Income (20%)

151,027.64

169,784.89

172,050.14

175,423.75

179,524.35

Total

276,027.64

390,607.00

484,535.74

563,052.34

629,966.22

Less: Withdrawals (20%)

55,205.53

78,121.40

96,907.15

112,610.47

125,993.24

Capital, end

220,822.11

312,485.60

387,628.59

450,441.88

503,972.98

125,000

220,822.11

312,485.60

387,628.59

450,441.87

Add: Share in Net Income (20%)

151,027.64

169,784.89

172,050.14

175,423.75

179,524.35

Total

276,027.64

390,607.00

484,535.74

563,052.34

629,966.22

Less: Withdrawals (20%)

55,205.53

78,121.40

96,907.15

112,610.47

125,993.24

Capital, end

220,822.11

312,485.60

387,628.59

450,441.88

503,972.98

Domingo, Capital Capital, beginning

Lopez, Capital Capital, beginning

65 | P a g e

NABAGO Store Statement of Financial Position For the Years 2019-2023 Sched Note Assets Currents Assets Cash and Cash Equivalents Prepaid Rent Total Current Assets

CF 4

2019

2020

2021

2022

2023

1,152,924.48 1,656,873.43 2,064,934.89 2,408,982.15 2,704,606.87 28,000.00 28,000.00 28,000.00 28,000.00 28,000.00 1,180,924.48 1,684,873.43 2,092,934.89 2,436,982.15 2,732,606.87

Noncurrent Assets Property, Plant and Equipment Total Assets

5

57,366.40 43,024.80 28,683.20 14,341.60 1,238,290.88 1,727,898.23 2,121,618.09 2,451,323.75 2,732,606.87

Liabilities and Partners’ Equity Accounts Payable Income Tax Payable VAT Payable Employee Benefits Payable Total Liabilities

6 7 8 9

31,589.38 82,650.67 66,179.07 55,504.20 235,923.31

Partner’s Equity Centeno, Capital Dela Torre, Capital Domingo, Capital Lopez, Capital Total Equity Total Liabilities and Partners’ Equity

66 | P a g e

OE OE OE OE

31,8392.34 90,956.19 67,177.48 55,504.20 245,470.21

32,138.32 92,169.72 67,662.89 55,504.20 247,475.12

32,447.37 93,977.01 68,385.80 55,504.20 250,314.38

32,759.50 96,173.76 69,264.50 55,504.20 253,701.96

281,233.17 428,728.41 549,442.89 650,062.81 735,479.47 281,233.17 428,728.41 549,442.89 650,062.81 735,479.47 220,822.11 312,485.60 387,628.59 450,441.88 503,972.98 220,822.11 312,485.60 387,628.59 450,441.88 503,972.98 1,004,110.57 1,482,428.02 1,874,142.97 2,201,009.38 2,478,904.91 1,238,290.88 1,727,898.23 2,121,618.09 2,451,323.75 2,732,606.87

Note 4: Prepaid Rent Prepaid Rent

Note 5:Property, Plant and Equipment Machinery and Equipment Less: Accumulated Depreciation Carrying Value of Machinery and Equipment

Furniture and Fixtures Less: Accumulated Depreciation Carrying Value of Furniture and Fixtures Total Property, Plant and Equipment

67 | P a g e

Schedule

2019

2020

2021

2022

2023

8

28,000.00

28,000.00

28,000.00

28,000.00

28,000.00

2019

2020

2021

2022

2023

54,608.00

43,686.40

32,764.80

21,843.20

10,921.60

10,921.20

10,921.60

10,921.60

10,921.60

10,921.60

43,686.40

32,764.80

21,843.20

10,921.60

17,100.00

13,680.00

10,260.00

6,840.00

3,420.00

3,420.00

3,420.00

3,420.00

3,420.00

3,420.00

13,680.00

10,260.00

6,840.00

3,420.00

-

57,366.40

43,024.80

28,683.20

14,341.60

-

-

Note 6: Accounts Payable Total Purchases Less: 70% Paid in Cash Accounts Payable Add: Remaining 30% of the Payable Total Accounts Payable

Note 7: Income Tax Payable Net Income before Tax Multiplied by: Tax rate Income Tax Expense Divided by: Income Tax Payable

68 | P a g e

2019

2020

2021

2022

2023

100,984.94

101,994.79

103,014.74

104,044.88

105,085.33

70,689.46 30,295.48

71396.35 30,598.44

72110.31 30,904.42

72831.42 31,213.47

73559.73 31525.60

1,293.90

1,233.90

1,233.90

1,233.90

1,233.90

31,589.38

31,8392.34

32,138.32

32,447.37

32,759.50

2019

2020

2021

2022

2023

1,102,008.87

1,212,749.22

1,228,929.55

1,253,026.79

1,282,316.81

30%

30%

30%

30%

30%

330,602.661

363,824.766

368,678.865

375,908.028

384,695.043

4

4

4

4

4

82,650.67

90,956.19

92,169.72

93,977.01

96,173.76

Note 8: Employee Benefits Payable SSS Pag-IBIG PhilHealth

Schedule

2019

2020

2021

2022

2023

17 18 19

15,043.20 4,800.00 13,200.00

15,043.20 4,800.00 13,200.00

15,043.20 4,800.00 13,200.00

15,043.20 4,800.00 13,200.00

15,043.20 4,800.00 13,200.00

13th Month Pay Total Employee Benefits Payable

20

36,000.00

36,000.00

36,000.00

36,000.00

36,000.00

55,504.20

55,504.20

55,504.20

55,504.20

55,504.20

Schedule 17: SSS Computation (Personnel) SSS Contribution Multiply by: No. of Workers SSS Monthly Contribution of Personnel Add: SSS Monthly Contribution of Clerk Total Multiply by: No. of Months Total SSS Contribution

69 | P a g e

2019

2020

2021

2022

2023

345.20 3

345.20 3

345.20 3

345.20 3

345.20 3

1,035.60

1,035.60

1,035.60

1,035.60

1,035.60

218.00

218.00

218.00

218.00

218.00

1,253.60 12

1,253.60 12

1,253.60 12

1,253.60 12

1,253.60 12

15,043.20

15,043.20

15,043.20

15,043.20

15,043.20

Schedule 18: PagIBIG Computation (Personnel) Pag-IBIG Contribution Multiply by: No. of Workers Pag-IBIG Monthly Contribution Multiply by: No. of Months Total PagIBIGContribution

Schedule 19: PhilHealth Computation PhilHealth Contribution Multiply by: No. of Workers PhilHealth Monthly Contribution Multiply by: No. of Months Total PhilHealth Contribution

70 | P a g e

2019

2020

2021

2022

2023

100.00

100.00

100.00

100.00

100.00

4

4

4

4

4

400.00

400.00

400.00

400.00

400.00

12

12

12

12

12

4,800.00

4,800.00

4,800.00

4,800.00

4,800.00

2019

2020

2021

2022

2023

275.00

275.00

275.00

275.00

275.00

4

4

4

4

4

1,100.00

1,100.00

1,100.00

1,100.00

1,100.00

12

12

12

12

12

13,200.00

13,200.00

13,200.00

13,200.00

13,200.00

Schedule 20: 13th Month Pay (Personnel) Salary per day Multiply by: No. of Workers Total Salary per day of Personnel Add: Salary per day of Clerk Total Multiply by: No. of Working Days Total Salary Divided by: Number of Months

2019

2020

2021

2022

2023

400.00 3

400.00 3

400.00 3

400.00 3

400.00 3

1,200.00

1,200.00

1,200.00

1,200.00

1,200.00

300.00

300.00

300.00

300.00

300.00

1,500.00

1,500.00

1,500.00

1,500.00

1,500.00

288

288

288

288

288

432,000.00

432,000.00

432,000.00

432,000.00

432,000.00

12

12

12

12

12

36,000.00

36,000.00

36,000.00

36,000.00

36,000.00

Total 13th Month Pay

71 | P a g e

Note 9: VAT Payable Net Sales

2019

2020

2021

2022

2023

2,296,134

2,330,316.00

2,347,407.00

2,372,424.00

2,402,643.00

Multiply By:

12%

12%

12%

12%

12%

Total Output VAT

275536.08

279,637.92

281,688.84

284,690.88

288,317.16

Divide By:

4

4

4

4

4

Output VAT

68,884.02

69,909.48

70,422.21

71,172.72

72,079.29

Cost of Service

90,165.13

91,066.78

91,977.45

92,897.21

93,826.19

Multiply By:

12%

12%

12%

12%

12%

Total Input VAT

10,819.8156

10,928.0136

11,037.2940

11,147.6652

11,259.1428

Divided By:

4

4

4

4

4

Input VAT

(2,704.9539)

(2,732.0034)

(2,759.3235)

(2,786.9163)

(2,814.7857)

VAT Payable

66,179.0661

67,177.4766

67,662.8865

68,385.8037

69,264.5043

72 | P a g e

NABAGO Store Statement of Cash Flows For the Year Ended December 31,2019-2023

Sched Cash collections from customers for sales Cash payment for office supplies Cash payment for cleaning supplies Cash payment for packaging supplies Cash payment for other supplies and materials Cash payment for salaries Cash payment for advertising Cash payment for taxes and licenses Cash payment for utilities Cash payment for communication Cash payment for organization cost Cash payment for feasibility cost Cash payment for rent Cash payment for VAT Payable Cash payment for income taxes Cash Provided by Operating Activities

73 | P a g e

2019

2020

2021

2022

2023

2,571,670.08

2,609,953.92

2,629,095.84

2,657,114.88

2690960.16

1,358.00

1,800.00

1,740.00

1,740.00

1,740.00

1,661.10

2,373.00

2,373.00

2,373.00

2,373.00

4,508.00

6,485.08

6,549.93

6,615.43

6,681.58

66,181.46

95,206.75

96,158.82

97,120.41

98,091.61

445,539.00 73,000.00

501,043.20

501,043.20

501,043.20

501,043.20

7,615.00

3,355.00

3,355.00

3,355.00

3,355.00

149,659.20

149,659.20

149,659.20

149,659.20

149,659.20

17,988.00

17,988.00

17,988.00

17,988.00

17,988.00

364,000.00

336,000.00

336,000.00

336,000.00

336,000.00

198,537.20

267,711.50

270,166.14

272,820.30

276,179.32

242,723.00

353,776.24

367,465.34

374,100.74

382,498.29

975,660.13

874,555.95

876,597.21

894,299.60

915,350.95

20,740.00 2,500.00

Cash Flow from Investing Activities Purchase of Machinery and Equipment Purchase of Furniture and Fixtures Cash Provided by Investing Activities Cash Flow from Financing Activities Cash contributions of partners Less: Cash withdrawals of partners Net cash provided (used) by Financing Activities Increase (Decrease) in Cash and Cash Equivalents Add: Cash and Cash Equivalents, beginning Cash and Cash Equivalent, ending

74 | P a g e

54,608.00 17,100.00 (71,708.00)

500,000.00 251,027.64

370,607.01

468,535.74

550,252.34

619,726.23

248,972.36

(370,607.01)

(468,535.74)

(550,252.34)

(619,726.23)

1,152,924.48

503,948.94

408,061.47

344,047.25

295,624.72

1,152,924.48

1,656,873.43

2,064,934.89

2,408,982.15

1,656,873.43

2,064,934.89

2,408,982.15

2,704,606.87

1,152,924.48

FINANCIAL RATIOS AND ANALYSES A. Profitability Ratio 1. Gross Income Ratio YEAR Gross Income Divide By: Net Sales Gross Income Ratio

2019 2,205,968.87 2,296,134.00 0.9607

2020 2,239,249.22 2,330,316.00 0.9609

2021 2,255,429.55 2,347,407.00 0.9608

2022 2,279,526.79 2,372,424.00 0.9608

2023 2,308,816.81 2,402,643.00 0.9609

In the year 2019, the gross income ratio is 96.07% meaning there is an income of 96.07% of gross profit per peso sales. 2. Return on Sales (Profit Margin) YEAR Net Income Divide By: Net Sales Return on Sales

2019 755,138.21 2,296,134.00 0.3289

2020 848,924.46 2,330,316.00 0.3643

2021 860,250.69 2,347,407.00 0.3665

2022 877,118.75 2,372,424.00 0.3697

2023 897,621.77 2,402,643.00 0.3740

Profit margin ratio measures the percentage of net income to sales, it indicates the amount of net income per peso sales. This means that for every peso of net sales there is corresponding effect of .33 in net income in the year 2019. 3. Return on Equity YEAR Net Income Divide By: Total Partners' Equity Return on Equity

75 | P a g e

2019 755,138.21 1,004,110.57 0.7520

2020 848,924.46 1,482,428.02 0.5727

2021 860,250.69 1,874,142.97 0.4590

2022 877,118.75 2,201,009.38 0.3985

2023 897,621.77 2,478,904.91 0.3621

Return on owner’s equity is the amount of net income returned as a percentage of partners’ equity. It measures an organization’s profitability by revealing how much profit they generate with the money the partners have invested. 4. Return on Investment YEAR Net Income Divide By: Average Total Assets Return on Investment

2019 755,138.21 1,238,290.88 0.6098

2020 848,924.46 1,483,094.56 0.5724

2021 860,250.69 2,788,707.28 0.3085

2022 877,118.75 2,286,470.92 0.3836

2023 897,621.77 2,591,965.31 0.3463

Return on Investment measures the gain or loss generated on an investment relative to the amount of money invested. The ratios have increasing values meaning the returns in the investments are also high. B. Liquidity Ratio 1. Current Ratio YEAR Current Assets Divide By: Current Liabilities Current Ratio

2019 1,180,924.48 235,923.31 5.0055

2020 1,684,873.43 245,470.21

2021 2,092,934.89 247,475.12

2022 2,436,982.15 250,314.38

2023 2,732,606.87 253,701.96

6.8639

8.4572

9.7357

10.7709

Current ratio is the test of short-term debt paying ability. As shown in the table, the organization was able to generate normal current ratio meaning the higher is the current ratio, the more capable the organization of paying its shortterm obligations.

76 | P a g e

2. Acid Test Ratio YEAR Quick Assets Divide By: Current Liabilities Acid Test Ratio

2019 1,230,290.88

2020 1,699,898.23

2021 2,093,618.09

2022 2,423,323.75

2023 2,704,606.87

235,923.31

245,470.21

247,475.12

250,314.38

253,701.96

5.2148

6.9251

8.4599

9.6811

10.6606

Acid test ratio measures the firm’s ability to pay its short-term debt from its most liquid assets without having to rely on inventory. In the year 2019, the ratio is 5.21 it means that for every one peso of the current liabilities there is an available quick asset of 5.21. This indicates that the organization has enough short-term assets to cover its immediate liabilities. 3. Payback Period YEAR Initial Investment Divide By: Net Annual Cash Flow Payback Period

2019 500,000.00 1,152,924.48 0.4337

In the year 2019, the payback period is 5 months and 6 days to recover its initial amount invested amounting to P500,000.00 C. Financial Leverage 1. Debt-to-Equity Ratio YEAR Total Liabilities Divide By: Total Partners' Equity Debt to Equity Ratio 77 | P a g e

2019 235,923.31

2020 245,470.21

2021 247,475.12

2022 250,314.38

2023 253,701.96

1,004,110.57 0.2350

1,482,428.02 0.1656

1,874,142.97 0.1320

2,201,009.38 0.1137

2,478,904.91 0.1023

In the year 2019, the debt-to-equity ratio is 23.50%. This shows that the organization can finance its assets relative to the amount of value represented in partners’ equity. There is a decrease in the ratio for the succeeding year indicating that the organization is able to pay its liabilities. 2. Equity-to-Debt Ratio YEAR Total Partners' Equity Divide By: Total Liabilities Equity to Debt Ratio

2019 1,004,110.57 235,923.31 4.2561

2020 1,482,428.02 245,470.21 6.0391

2021 1,874,142.97 247,475.12 7.5731

2022 2,201,009.38 250,314.38 8.7930

2023 2,478,904.91 253,701.96 9.7709

Equity to debt ratio indicates how much debt the enterprise is using to finance its assets. This implies that for every one peso of the equity financing, there is 4.26 provided by the creditors for the first year.

78 | P a g e

CHAPTER V SOCIO-ECONOMIC STUDY

INTRODUCTION This chapter entails the socio-economic contributions that the enterprise can offer and the intended social benefits that the enterprise can provide during the operation of the business. The enterprise aims to help the constituents of the City of Baguio. It will focus on the development of the business, the country and in the government. In line with this, the study will briefly explain how the business will aid in providing employment opportunities to individuals. Moreover, the advantage of stakeholders, the effects in market and society as well as the contribution of the business to the government in the form of taxes. A. INCOME AND EMPLOYMENT Employment is one of the prevalent crises that the Philippines is encountering right now for the reason that job creation has struggled to keep pace with an ever-expanding population. The enterprise aims to accomplish one of its main goals which is to provide jobs to the constituents of the Baguio City because one of the vital aspects where a company enables economic development is by reducing the rate of unemployment. With this employment, these individuals become economically stable and attain personal development. During this time when the rate of unemployment is high, launching a new venture is a viable opportunity for individuals to have a source of income in such a way they are able to support their families and cover their expenses. B. TAXES The proposed business is expected to give a contribution to the government in the form of taxes. Taxes are used by the government to raise revenues for its operations, infrastructure, welfare, education defense. It is also for serving the weaker sections of the society through the welfare of programs. It is very crucial because it is considered as support for the life of a country 79 | P a g e

and known as the primary fund for the existence of the government to produce their projects and infrastructures for the benefit of the people of Baguio City. C. ENVIRONMENTAL IMPACT NABAGO Store recognizes its responsibilities in promoting a safe and clean environment. The proponents, as parts of the organization, shall strictly take these environmental activities in the interest of both the business and the communities in which it operates. The organization will guaranty the environmental laws are strictly followed by its employee, such as for the waste disposal management of the organization; NABAGO will adhere to all environmental ordinance laws such as the Sanitation Code of the Philippines to maintain cleanliness and organize disposal of waste to avoid polluting the environment. Also, the customers will be assured that the supplies and machines used in performing the service won’t harm the environment around the business area and its people as well. And rest assured that the operations of the business will be monitored properly in relation to handling the sanitation properly; proper segregation of wastes, proper hygiene will be observed inside and outside of the business operations, orientation on cleanliness, sanitation and proper wearing of attires will be given to employees and these policies should be strictly followed and regular cleaning schedules will be imposed to maintain cleanliness and good work place at all times. D. CUSTOMERS The customer is one of the main parts of the enterprise. They are the main beneficiary of the business; therefore, the proponents see to it that the customers’ demand satisfaction and expectations are being prioritized and met.

80 | P a g e

Socio-Economic Relationship Aspect

Employment and Income

Socio-Economic Factors Affected

Individual

Socio-Economic Contribution

Improved standard of living

Family

Taxes

Government

Community Development

Environment

Community

Proper Waste Disposal

NABAGO Store

Customers

81 | P a g e

Customer Satisfaction

CHAPTER VI ORGANIZATION AND MANAGEMENT STUDY

INTRODUCTION This chapter contains the ways and means to attain the objectives and the overall perspective of the enterprise. It shows the basic consideration in putting up the business, the form of ownership that the proponents chose, the organizational chart, the essential requirements in its formation and the rules and regulations of the enterprise. The composition of offices and key personnel who will operate in the business and basic policies of the enterprise will be shown. These policies will be strictly followed by the people in the organization to come up with attaining the goals. A. BASIC CONSIDERATION This study has been conducted to sustain all the possibility for the success of the proposed project by omniscient and organized analysis of all the factors that may affect the operations of the enterprise. NABAGO Store’s purpose is to earn profit and expand its operation while satisfying the needs and wants of the customers. It also aims to achieve the enterprise’s mission and vision; this enterprise intends to provide a good quality of services that would bring satisfaction to the client and will continue to innovate and improve its services that will surely satisfy the clients. B. FORM OF OWNERSHIP The form of ownership of NABAGO Store is a general partnership. And as a general partnership, according to Articles of Partnership, two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profit among themselves. Such partners have unlimited liability, which means their personal assets are liable to the partnership’s obligations.

82 | P a g e

C. ORGANIZATIONAL CHART MANAGERS/OWNERS

CLERICAL STAFF

OPERATIONAL STAFFS

  

PERSONNEL 1 PERSONNEL 2 PERSONNEL 3

All of the partners agreed that two of them will be the bookkeeper and the administrative officer. D. OFFICERS AND KEY PERSONNEL Hiring of Employees Hiring and selection of employees will be authorized and done by the owners who are also the managers of the enterprise. They will supervise the hiring of the applicants according to the qualification enumerated for each position. Aside from the qualification mentioned, applicants are also required to submit the following: 

Resume with 2x2 picture



Medical Certificate



NBI/Police/Barangay Clearance



Birth Certificate

1. Managers The partners will take responsible of managing the enterprise. The partners will have equal power and authority in managing and supervising the business. The partners will have the following responsibilities: 83 | P a g e



They will be in charge of making different strategies that will help in the growth and development of the enterprise.



They will be responsible in hiring qualified workers for the business.



They will be in charge in the making and implementing of rules and regulations that will guide them and their employees for the proper operation of the business.



They will be responsible for the financial health of the enterprise, producing financial reports and develop strategies and plans for the long-term financial goals of their enterprise.



They will be in charge of enhancing the research and the development effort in developing innovative and efficient process for the services offered by the enterprise.



They will serve as the production and operation manager of the business which includes the following responsibilities.

2. Clerk/Cashier Job Description: 

Responsible in performing routine clerical, secretarial and administrative work in answering telephones, receiving the public, providing customer assistance, data processing and recordkeeping.



Responsible in receiving payment by cash, issuing of receipts or change due to customers and in counting money in cash drawn at the beginning of shift to ensure that amounts are correct and that there is adequate change.

Qualification: 

Must be of legal age



At least high school graduate



Willing to work overtime



Can work under pressure and is flexible



Must possess good moral character



Must possess good communication skills



Must have basic math skills

84 | P a g e

3. Personnel 1, 2& 3 Job Description: 

Responsible in performing the services offered by the enterprise (bio cleaning, restoration and repair and customization):



Responsible in removing of dirt, bacteria and fungus, disinfecting, deodorizing process to reduce unpleasant odors and degreasing.



Responsible for treatment of damaged straps, zippers and fabric, stitching and restoring of the original color.



Responsible for customization services; change of bag color, adding of snap buttons and embossing.

Qualification: 

Must be of legal age



At least high school graduate



Willing to work overtime



Can work under pressure and is flexible



Must possess good moral character



Must have a background about the services offered by the enterprise

E. GUIDELINES AND POLICIES NABAGO Store is willing to create a positive working environment where employees feel good about coming to work and an environment which provides the needed motivation to sustain them and be productive throughout the day. The business will have a transparent and open communication which addresses the employee’s need to feel that what they have to achieve company goals. Also, the business will promote a work-life balance, where it can improve job satisfaction, creativity and out-of-the-box thinking and will be focusing on training and development since change is becoming more rampant than ever before. Furthermore, the business will use a positive reinforcement such as shower praises, a simple verbal recognition of hard work that spurs employee’s motivation, acknowledgement of one’s presence by having daily interactions with the employees and lastly, rewarding and providing of incentives.

85 | P a g e

CHAPTER VII ACCOUNTING INFORMATION SYSTEM

INTRODUCTION Accounting Information System consists of the people, records, and methods used to gather financial information about business events, record it, process it into a useful form, and communicate the information to end users and decision makers. In other words, an accounting system is everything and everyone involved in collecting, recording, and organizing financial transactions for the company. Specially trained accountants work in-depth with AIS to ensure the highest level of accuracy in a company's financial transactions and recordkeeping, as well as make financial data easily available to those who legitimately need access to it — all while keeping data intact and secure. It significantly enhances decision making in organizations, and cuts across traditional lines in accounting, playing a vital role in the overall efficiency and effectiveness of accounting operations. Accounting System gives the firm’s management the information to evaluate financial performance over a previous period of time, and to make decisions regarding the future and

also

is

designed

including auditing, financial

to

support

all

accounting and

accounting reporting,

functions

and

activities

managerial/ management

accounting and tax. Technology is the purposeful application of information in the design, production, utilization of goods and services and in the organization of human activities. It is widely used in several ways in attaining efficiency and effectiveness in the business. Moreover, technology helps businesses in a number of ways that generally center on doing things bigger, better or faster than without technology. It makes information available to decision makers, helping to improve the quality and speed of decision making and also improves the collection of vital information needed for business decisions thus helps the management in tracking errors or mistakes. Furthermore, it is a strategic investment in such a way that it enables enterprises to track financial and operating events, to attain excellent quality service and to improve value and profits. 86 | P a g e

The proponents will adopt a computerized accounting information system for effective and efficient operation of the business as well as in maintaining company’s accounting records and information. An accounting information system (AIS) is a structure that a business uses to collect, store, manage, process, retrieve and report its financial data so that it can be used by accountants, consultants, business analysts, managers, chief financial officers (CFOs), auditors, regulators and tax agencies. An accounting information system is generally a computer-based method for tracking accounting activity in conjunction with information technology resources. An accounting information system combines traditional accounting practices, such as the Generally Accepted Accounting Principles (GAAP), with modern information technology resources.

Accounting Information System has three basic functions. The first function of AIS is the efficient and effective collection and storage of data concerning an organization’s financial activities, including getting the transaction data from source documents, recording the transactions in journals, and posting data from journals to ledgers. The second function of AIS is to supply information useful for making decisions, including producing managerial reports and financial statements. The third function of AIS is to make sure controls are in place to accurately record and process data.

ACCOUNTING INFORMATION SYSTEM Accounting Information System will be implemented by NABAGO Store in serving its business functions and operations and keeping its accounting records and information. In the development of Accounting Information System, there are five basic steps that business will follow and these are planning, analysis, design, implementation, and support. 1. Planning- This involves the identification of scopes and objectives in the project, the definition of project responsibilities, control requirements, project phases and budgets, and final services. 2. Analysis- This phase is used to determine and document the organization and business process used by the organization such processes are usually designed to take advantage of best practice or of the operating characteristics of modern system solutions. 87 | P a g e

3. Implementation- This includes the installation and programming of the system in the organizational operation. It also includes verifying and testing, converting data, training and documenting. 4. Design- This involves the detailed design of all inputs, processing, storage, and outputs of the proposed actual system. The user will be employing in the course of business. 5. Support- This shows the user on how the system works to the business operations. It allows feedback and constant development of the system through maintenance and upgrade.

88 | P a g e

89 | P a g e

Accounting cycle is the sequence of accounting procedures used to record, classify and summarize accounting information in financial reports at regular intervals. It begins with the initial recording of business transactions and concludes with the preparation of a complete set of formal financial statements. The term cycle indicates that these procedures must be repeated continuously to enable the business to prepare new, up-to-date financial statements at reasonable intervals. The process involves the following activities: 1. Identifying of quantifiable transactions The accounting cycle always begins from identifying the economic transactions that can be quantified. Each of these transactions would affect the accounting elements of the enterprise. A transaction is when two parties engage in an exchange of goods or services for a sum certain in money and then followed by preparation of transactions source document. These transactions should be evidenced by source documents which can be used to prove the validity of an event and must have a two-fold effect on the elements of accounting. Examples of these are official receipt, cash voucher, petty cash voucher, checks, statement of account, promissory note, sales/purchase invoice, debit/credit memorandum, copy of a contract entered into, cancelled checks, remittance statement and the like. 2. Journalizing transaction After identifying transactions that are accountable, these data must be recorded through journalizing in the proper books. This is an important task since it is used to arrive in the amounts to be shown in the financial statements. Recording the transaction is done by making entries in the appropriate journal, such as the sales journal, purchase journal, cash receipt or disbursement journal, or the general journal. Such entries are made in chronological order in accordance with established accounting rules and procedures. The entries in the journal are based on information from the source documents such as invoices, official receipts, deposits, deposit slips, vouchers etc. 90 | P a g e

3. Posting to the ledger After a journal entry is prepared, the data therein are transferred to another book of accounts called a ledger. The procedures for posting are the following: A. Locate the appropriate account in the ledger where the debit entry would be posted. B. Record the date and the amount in the journal entry to the corresponding ledger account. C. In the ledger, under the posting reference or folio column of the account being posted, place the page number of the journal from which posting has been made. D. In the journal, under the posting reference or folio column of the account posted, write the account number as indicated in the ledger 4. Trial Balance Preparation A Trial balance verifies the accuracy of the postings which occurred during the period by showing the total debits posted equals the total credits posted. It is a control tool that helps find certain clerical errors committed in the recording and posting processes. If the trial balance is out-of-balance, this is a definite sign that error or errors were committed. Errors can be located upon reviewing the completed journal entries, postings, additions, subtractions, and other clerical steps performed. When an erroneous entry has been posted to the ledger, it is usually considered preferable to correct it by means of an entry in the journal. 5. Adjustments Preparation Adjustments are results of accounting concepts and principles such as going concern, accrual basis and matching principle. Adjusting entries are prepared so that there would be a proper matching of earned income and incurred expenses thus prepare adjusting entries to record accrued, deferred, and estimated amounts. Then, post adjusting entries to the ledger accounts.

91 | P a g e

After that, prepare the adjusted trial balance. This step is similar to the preparation of the unadjusted trial balance, but this time the adjusting entries are included. Correct any errors that may be found. 6. Financial Statements Preparation 

Income Statement: It is a formal statement showing the performance of an enterprise for a given period of

time. It is measured in terms of the level of income earned from its operation through proper management of its resources. It also developed the net income for the current accounting period. This is used to reflect the probability of that period. It is linked to the statement to the owner’s equity via the net income amount which appears in both of those statements. 

Balance Sheet It is a formal statement showing the financial position of an entity as of a particular date.

It presents the status of the permanent account at the end of the particular accounting period. They represent a detail transaction of the accounts making up the accounting equation (A=L+SHE). It also represents the situation as of a specific date. 

Cash Flow Statement It is a statement featuring the cash inflows and outflows of the business. It accounts all

transaction and events that affect the cash balance. It is derived from the other financial statements using either the direct or indirect method 

Statement of Owner’s Equity It presents the changes which have occurred in the owner’s equity as a result of the

current period’s activities. Therefore, it results represent what occurred within a period of time. It is linked to the balance sheet via the current amount of the current owner’s capital account. 7. Closing Journal Entries Preparation Temporary accounts are closed; these are the accounts found in the income statement. They are closed to income summary account, and then the income summary account will then be 92 | P a g e

closed to retained earnings or to the capital. Any dividend or withdrawal accounts also are closed to capital. 8. Posting closing entries to the ledger accounts. 9. Post-closing Trial Balance Preparation After the accounts are ruled, another trial balance will be prepared to prove the equality of the debits and credits of the accounts remaining with open balances in the ledger. However, it includes only the real accounts with remaining balances after posting the closing entries for the nominal accounts. Post-closing Trial Balance is prepared to test the equality of the ledger balances that are carried forward from the previous period to the first day of the next accounting period. 10. Reversing Entries Preparation These are entries that are often used when there had been accruals or deferrals that were recorded as adjusting entries on the last day of accounting period. To avoid double counting the amount when the transaction occurs in the next period, reverse the particular adjusting entry. MANUAL BOOKKEEPING SYSTEM The business will use the manual bookkeeping system since the business is starting small. Computerizing the accounting system will not be cost-beneficial to the business for the reason that the business only has few employees and maintains few accounts. The business will be keeping the financial records which include official receipts and other vital source documents in a safe place which is in the administrative office. CHART OF ACCOUNTS The chart of accounts is a list of accounts and their account numbers that are used in the business. It is used as a guide for the bookkeeper in recording transactions. The accounts in the chart are usually arranged in the following order: assets, liabilities, equity, revenues, gains, expenses, and losses. A good accounting system design also begins from establishing such accounts. The codes are used for the ease of making entries in the books. 93 | P a g e

NABAGO’s financial statements comprise of elements that are relevant in the decision making and these are assets, liabilities, equity/capital, revenues and expenses. The first three elements represent the financial condition or financial position of the business at a give specific date and such are located in the balance sheet while the other two represents the information on the enterprise’s results of operations and such are located in the income statement. Statement of Financial Position Chart of Accounts These are the accounts that will be used under Statement of Financial Position of the business. ACCOUNT CODE

ACCOUNT TITLE ASSETS Current Assets:

101

Cash and Cash Equivalents

102

Prepaid Rent Non-Current Assets

103

Machinery and Equipment

104

Accumulated Depreciation – Machinery and Equipment

105

Furnitures and Fixtures

106

Accumulated Depreciation – Furniture and Fixtures

LIABILITIES Current Liabilities 200

Accounts Payable

201

Income Tax Payable

202

VAT Payable

203

SSS Payable

204

PhilHealth Payable

205

PAG-IBIG Payable

94 | P a g e

CAPITAL 300

Centeno, Capital

300-A

Centeno, Drawing

301

Dela Torre, Capital

301-A

Dela Torre, Drawing

302

Domingo, Capital

302-A

Domingo, Drawing

303

Lopez, Capital

303-A

Lopez, Drawing

Statement of Comprehensive Income Chart of Accounts These are the accounts that will be used under Income Statement of the business. REVENUE 400

Sales Revenue

EXPENSES 500

Cost of Services

501

Office Supplies Expense

502

Cleaning Supplies Expense

503

Other Supplies and Materials Expense

504

Rent Expense

505

Utilities Expense

506

Communication Expense

507

Advertising Expense

508

Taxes and licenses

509

Depreciation Expense

510

SSS Contribution Expense

511

Philhealth Contribution Expense

95 | P a g e

512

PAG-IBIG Contribution Expense

513

Income Tax Expense

Basic Accounting Elements. 1. ASSETS Assets are economic resources a business owns as result of past events and from which future economic benefits are expected to flow to the business. There are two major classifications of assets: Current and Non-Current Assets. 

CURRENT ASSETS Current assets are short-term economic resources that are expected to be realized or sold

or consumed within twelve 12 months after the reporting period or in its normal operating cycle. 

Cash and Cash Equivalents It comprises cash on hand and demand deposits, together with short-term, high liquid

investments that are readily convertible to a known amount cash. 

Prepaid Rent A current asset account that reports the amount of future rent expense that was paid in

advance of the rental period. 

NON-CURRENT ASSETS Noncurrent assets are company long-term investments where the full value will not be

realized within the accounting year. 

Property, Plant and Equipment These are tangible assets which are held an enterprise for used in production or supply of

goods and services, for rental to others or for administrative purposes, and are expected to be used for more than one accounting period.

96 | P a g e



Accumulated Depreciation This is the aggregate periodic costs of using a depreciable plant asset. It represents the

decrease in value of the asset due to continuous use, passage of time, wear and tear, and obsolescence 2. LIABILITIES Liabilities are present obligations of an enterprise arising from past transactions or events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits 

CURRENT LIABILITIES Liabilities that are expected to be settled in its normal operating cycle or within twelve

months after the reporting period or those held primarily for the purpose of trading or those for which the entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. 

Accounts Payable This refers to the indebtedness that arise from purchase of goods, materials, supplies or

services in an open charge account, that is, it is not evidenced by any written promise to pay. 

Income Tax Payable This reflects how much taxes the business will have to pay for the accounting period.



VAT Payable This is the difference between Output VAT and Input VAT and the amount that will need

to pay to the tax authorities (BIR). 97 | P a g e



SSS Payable, Philhealth Payable, PAG-IBIG Payable Payables to the government agencies like Social Security Systems, Philhealth Insurance

Corporation and Home Development Mutual Fund respectively, representing payroll-related mandatory contributions of employer and employees. 3. PARTNERS’ CAPITAL It comprises the capital contribution and withdrawal of the partners. The partners have the rights or clams to the assets of the business. 

Partner’s Equity This is the residual interest of the partners in the assets of the business after deducting all

claims of the creditors. 

Partner’s Drawing Account This refers to the money or property taken out of a business by one of its partners for

personal use. This is a balance sheet account. 4. INCOME The increases in economic benefits during the accounting period in the form of inflows or enhancements of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from equity participants 

Service Revenue Amount earned from the sale of services.

5. EXPENSE The decreases in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to equity participants 

Salaries and Wages Expense

98 | P a g e

The amount paid to services rendered by the employees during the operation of the business.



Office Supplies Expense Amount of administrative supplies charged to expense in a reporting period. These items

are charged to expense when used. 

Cleaning Supplies Expense Amount of cleaning supplies charged to expense in a reporting period. These items are

charged to expenses when used. 

Other Supplies and Material Expense This account is used to record the cost or value of supplies used in the production.



Packaging Supplies Expense Amount of packaging supplies charged to expense in a reporting period. These items are

charged to expenses when used. 

Depreciation Expense It represents the current periodic cost for using depreciable assets. In accordance with the

systematic cost allocation principle, the acquisition cost of depreciable asset should be allocated as expense over its useful life. 

Advertising Expense The cost incurred by the company for ads, promotion and other marketing expenses to

attract public attention to the product. 

Rent Expense

99 | P a g e

Charges on the right to occupy shop or office space or enjoy the use of other properties or assets belonging to another party. 

Utilities Expense Cost of electricity and water consumed during the current accounting period.



Communication Expense Charges for telephone, internet or other electronic communicating devices.



Taxes and Licenses Expense This refers to the business taxes other than income tax, licenses, and other fees due to the

government. OVER-ALL INTERNAL CONTROL

The business will set internal controls that guide activities to reduce the chances of fraud, significant errors or unforeseen detriments to a business. Internal controls are put into place so an organization's activities, policies and plans are efficiently integrated to best achieve business goals. The internal controls of a business will benefit in many ways, it may help detect errors early and address them before they get out of hand and reduce the events of misappropriation of assets and it helps the management to present a methodology for identifying, assessing, and responding to risk. Thus, management is responsible for making precautionary measures to avoid risks caused by poor internal control. At the organizational level, internal control objectives relate to the reliability of financial reporting, guarantee that the company’s actions are within the bounds of the law and compilation of financial and managerial data that can be evaluated so that feedback can be given and implemented. Moreover, internal control provides other benefits such as helping the management to prepare and implement effective plans by providing correct and fact information, helping to regulate the work of staffs through division of work among the staffs in a scientific manner

100 | P a g e

which helps to make the daily works of staffs effective and helping to put moral pressure on staffs. The internal control of NABAGO Store is summarized in three major classifications: 1. Preventive ControlsDesigned to discourage errors or irregularities from occurring. They are proactive controls that help to ensure departmental objectives are being met. Examples of preventive controls are segregation of duties, approvals, authorizations and verifications and securities of assets. 2. Detective Controls Designed to find errors or irregularities after they have occurred. Examples of detective controls are performance review, audits and reconciliations. 3. Corrective Controls Coupled with preventive and detective controls, corrective controls help mitigate damage once a risk has materialized. A business can document its policies and procedures, enforcing them by means of warnings and employee termination when appropriate. When managers wisely back up data they can restore a functioning system in the event of a crash. If a disaster strikes, business recovery can take place when an effective continuity and disaster management plan is in place and followed. CONTROL PROCEDURES Control procedures are the policies and procedures that have been prepared to guarantee that owners and managers can seize the necessary and correct action to ensure accomplishment of business objectives. These procedures explain the how, why, what, where and when for any set of actions. Written procedures can be a great help in educating the new employees by clarifying why they need to do what is asked of them and such procedures ensure the prevention of errors and aid the employees in the holistic comprehension of the business. Moreover, it certainly reduces the time allotted to train the new employees. Each of the internal control procedures is designed to fulfill at least one of these eight criteria: 101 | P a g e

1. Completeness – that all the records and transactions are included in the reports of the business. 2. Accuracy – the right amounts are recorded in correct amounts and manner. 3. Authorization – the correct level of authorizations, which cover such things as approvals, payments, entry and computer access. 4. Validity – that the invoice is for work performed and the business has properly incurred the liability. 5. Existence of assets and liabilities – that purchases have been recorded for goods or services that have not been yet involved. 6. Error handling - that errors in the system have been identified and processed. 7. Segregation of duties – to ensure certain functions are kept separate. 8. Presentation and disclosure – timely preparation of financial reports in conformity with generally accepted accounting principles.

102 | P a g e

Revenue Cycle This includes any activities or tasks related in accommodating and rendering services to the customers and collecting their payments. The revenue cycle starts from the arrival of the customers. The customers will choose which type of service they want to avail of, then the cashier will bill the customer and input the chosen service in the system. The total bill will automatically be computed in the system. Upon receipt of payment, the cashier will print the receipts and each official receipt will be given to both the bookkeeper and customer and after such, the cashier will prepare a summary of collections and such will be given to the bookkeeper and a copy will be kept for filing.

103 | P a g e

Internal Control System for the Revenue Cycle 

Authorization In recording the sales in the system, utmost care and diligence must be observed by the cashier.

In case of errors in the process of recording, the cashier must ask for the authority of the administrative officer to make the necessary changes. Prior to this, however, the cashier would need to explain how such error was incurred. Only after verification of the reason shall the administrative officer authorize the changes in the transaction. 

Execution Delay in the service operation must be avoided at all times to minimize customer complaints.

The specified procedures in the process must be followed properly to avoid unnecessary delays and unintended misplacement of vital source documents. 

Access The employee who handles cash would complete a training course on the appropriate procedures

before having access to the log and safe. The procedures would be documented in writing and handed to the employee at the start of training. Store all cash in a safe or lockbox until it is deposited in the bank. Only the cash handling clerk would have a key to the lockbox or the combination to the safe. If the employee leaves the company or is reassigned to another position, the lock or safe combination will be changed. 

Completeness For every transaction, the cashier shall issue an official receipt to keep track of the sales of the

partnership.

104 | P a g e

Purchasing Cycle In the purchasing cycle, it would include the identification of the necessary supplies and materials for the operation of the business. Moreover, it includes placing of orders, and receiving of such supplies and materials. The employees will identify the needed supplies and materials for the operations of their respective areas. A purchase requisition form will be needed and prepared specifying the supplies and materials with its specific quantities and unit price and will be directed to the administrative officer. Thereafter, the administrative officer will verify whether such is within the budget, if not, it will again be in the process of purchase requisition, however, if its within the budget, the administrative officer will approve the form and prepare a purchase order to be given to the supplier. The employee will receive and check the supplies and materials delivered by the supplier and prepare a receiving report to be forwarded to the administrative officer. After such, the administrative officer will prepare two copies of disbursement vouchers, one for the bookkeeper and another for filing.

105 | P a g e

Internal Control System for the Purchasing Cycle 

Segregation of duties Different people will be assigned related buying functions to ensure proper separation of duties,

no single person has complete control over all buying activities. There would be one who approves the purchases, another for the receipt of ordered supplies and materials and another who is responsible for reviewing and reconciling financial records. 

Security of Assets Once the purchased goods have been received, the materials will be secured in safe location. In

order to ensure the resources are accounted for, there would be a periodic inventory count and the results will be compared with the amounts shown on control records. 

Review and Reconciliation There would be a timely review of purchase orders. The accuracy of information for prior

payment, correct quantity ordered and price charged will be checked adequately. 

Execution The supplies and materials should be bought accordingly to quality and pricing of the supplier.

Delivered gods are held for inspection before storing or transferred for operations.

106 | P a g e

Disbursement Cycle The disbursement cycle is where purchases of the business, water and electricity bills, salaries of the employees and other expenses incurred in the operations of the business are paid. Upon receipt of bills, the administrative officer will prepare disbursement vouchers and issue checks. Subsequently, the administrative officer will verify whether the disbursement vouchers, bills, and checks are true correct. After verification, the checks will be signed and it will be forwarded to the supplier. The stamped disbursement vouchers and bills and official receipts would then be given to the bookkeeper for recording purposes.

107 | P a g e

Internal Control System for the Disbursement Cycle 

Segregation of duties No financial transaction will be handled by only one person from beginning to end. Different

people will be assigned in the authorization of payments and signing of checks and recording of payments in the books to ensure that cash is disbursed only upon proper authorization, for valid business purposes, and that all disbursements are properly recorded. 

Authority The power to authorize payments will be designated only to the administrative officer to ensure

that a single person is paying attention to monitor going out of the organization. 

Completeness Amounts for purchase of supplies and materials, water and electricity bills, salaries of the

employees and other expenses incurred in the operations of the business promptly recorded in the correct amounts, in the appropriate accounts and in the proper accounting period.

108 | P a g e

Payroll Cycle Employees are required to give their information and they will be given time cards. The bookkeeper will be responsible in checking and summarizing the Daily Time Record (DTR) and updating employee records. Moreover, the bookkeeper will be the one who will prepare the payroll register, employee earnings record and checks. Thereafter, the bookkeeper will record the payroll in the general journal. The payroll register will have two copies, one for the administrative officer, also the checks will be given to the latter, and the second copy of the payroll register is for filing. The payroll and checks will be verified and signed and it will now be sent to the employees.

Internal Control System for the Payroll Cycle 

Segregation of duties Different people will be assigned in performing key payroll duties to ensure accomplishment of

proper payroll processing.



Accountability, authorization, and approval The company must adhere to accountability principles in such a way that there is authorization,

review and security that payroll entries and personnel actions follow policy. There would data confidentiality or privacy by giving payroll and personnel access only to authorized individuals. Periodic review and update of signature authorizations and review of attendance records for accuracy and compliance policy. 

Review and reconciliation On average, payroll costs will represent the largest cost component of your operations budget so

there would be monthly reconciliation activities to ensure that the business is paying the right people at the correct rates. There would be a review and an audit of monthly payroll costing reports and performance of monthly reconciliations of operating ledgers to ensure accuracy and timeliness of expenses.

109 | P a g e

BUSINESS FORMS AND DOCUMENTS

These are the sources of materials or documents evidencing the transactions which are used as basis for recording. A. Official Receipt Official Receipts are hard copies of financial transactions used by business for recording and tax purposes. These documents are issued to customers as a proof of sales and issued normally upon receipt of payment from the buyer. This includes the vendor’s name, date of transaction and receipt number to monitor the daily transactions. The official receipt is printed. These documents are important to maintain and keep track of the transactions made by the employee and the buyer to avoid any financial misunderstandings.

110 | P a g e

B. The General Journal The general journal is the master journal that all company transactions or journal entries are recorded. It records business transactions in order of date using the principle of debit and credit. The process of recording in the general journal is called journalizing. A typical general journal has at least five columns: one for the date, account titles, posting reference, debit, and credit columns. NABAGO 3rd floor Perez Building, 163 Lower Bonifacio Street, Baguio City GENERAL JOURNAL Date

Description

PR

Debit

Credit

C. The General Ledger A general ledger is a company's set of numbered accounts for its accounting records. The ledger provides a complete record of financial transactions over the life of the company. The ledger holds account information that is needed to prepare financial statements and includes accounts for assets, liabilities, owners' equity, revenues and expenses. NABAGO 3rd floor Perez Building, 163 Lower Bonifacio Street, Baguio City

111 | P a g e

GENERAL LEDGER

ACCOUNT NO. ______ Date

Description

PR

Debit

Credit

Balance

D. The Cash Receipt Journal This is a special journal used to record all transactions in which cash is received. NABAGO 3rd floor Perez Building, 163 Lower Bonifacio Street, Baguio City Cash Receipt Journal Date

Accounts Credited

Particulars

F

Amount Received

E. The Cash Disbursements Journal The cash disbursements journal, also known as the cash payments journal, is an accounting form used to record all cash outflows - purchases made in cash or on account. 112 | P a g e

NABAGO 3rd floor Perez Building, 163 Lower Bonifacio Street, Baguio City Cash Disbursements Journal Date

Check

Particulars

#

PR

Sundry

Accounts

Purchase

Cash

Accounts

Payable

Discount

Credit

F. Purchase Journal A purchases journal is a specialized type of accounting log that keeps track of orders made by a business on credit or on account. NABAGO 3rd floor Perez Building, 163 Lower Bonifacio Street, Baguio City Purchase Journal Date

Supplier Account Credited

113 | P a g e

Purchases

Supplies

Equipment

Accounts Payable

G. Purchase Requisition A Purchase Requisition is an internal document filled out by any of the employees within the business relaying the items they want the manager to buy for them.

114 | P a g e

H. Purchase Order A Purchase Order is an external document made by the business which then sent to the suppliers for a request to purchase goods.

115 | P a g e

I. Receiving Report

116 | P a g e

A Receiving Report is an internal document made in order to confirm the receiving of items acquired by the business.

117 | P a g e

APPENDICES Appendix A SAINT LOUIS UNIVERSITY School of Accountancy and Business Management Maryheights, Bakakeng, Baguio City Greetings! We, the undersigned fourth year students taking up Bachelor of Science in Management Accounting, are conducting a feasibility study about “Bag Related Services “(Bio cleaning, Restoration and Repairs and Customization of bags) to obtain pertinent data, we created a questionnaire and we respectfully request you to provide your honest answer to every item. Rest assured that your answer will be used for academic purposes only. We are hoping for your cooperation towards the fulfillment of this feasibility. Your input is highly appreciated. Thank you very much! Respectfully yours Dela Torre, Joseph Clark P. Centeno, Ma.Kaye E. Domingo, Mae Aileen A. Lopez, Jumairah D. Direction: Kindly put a check mark on the box provided that corresponds your answer. 1. Do you have old/used bags? Yes No 2. What size of bags do you have? Extra Small (2.5-10 inches) Small (11-15) Medium (16-21) Large (22-25) Extra Large (26-30) 118 | P a g e

3. If we were to open a Bag Related Services (Bio Cleaning, Restoration and Repairs and Customization) located in Baguio City, will you be willing to avail our services? (If yes, please proceed to No.4) Yes No 4. What services would you avail of? Bio cleaning Restoration and Repairs (Color restoration and repair of broken zipper, damaged and/or tore fabric and stitches) Customization (color change, adding of pocket and snap buttons, changing of straps and embossing of names or initials) 5. How often would you avail the given services? a) Bio cleaning Once a week Once a month Twice a month Once a year Twice a year Others: (pls. specify) _____________ b) Restoration and Repairs Once a week Once a month Twice a month Once a year Twice a year Others: (pls. specify) _____________ c) Customization Once a week Once a month Twice a month Once a year Twice a year Others: (pls. specify) _____________

Appendix B Annualized Availing Service

Frequency Once a week Once a month Twice a month Once a year Twice a year Others Total

Bio-cleaning

Frequency Once a week Once a month Twice a month Once a year Twice a year Others

Bio-cleaning Restoration and Repairs Customization 49*41 weeks 14*41 weeks 11*41 weeks 89* (288/30) 64* (288/30) 34* (288/30)

119 | P a g e

49 89 27 40 39 7 251

Restoration and Repairs Customization 14 64 32 95 37 23 265

11 34 21 109 19 11 205

27*2*(288/30)

32*2*(288/30)

21*2*(288/30)

40*1 39*2 7

95*1 74*2 23

109*1 19*2 11

Appendix C SSS CONTRIBUTION TABLE Employer-Employee

120 | P a g e

Appendix D Permit from Bureau of Internal Revenue

L²C³ Enterprise

121 | P a g e

Appendix E Permit from the Mayor’s Office

122 | P a g e

Appendix F

Application for Registration

123 | P a g e

124 | P a g e

Appendix G

Sanitary Permit

125 | P a g e

Appendix H (To be filled up by the BIR ) DLN:

PSIC:

Account Information Form

Republika ng Pilipinas Kagawaran ng Pananalapi

Kawanihan ng Rentas Internas

For the Year

2 Category:

(YYYY) Part I 3

Taxpayer/Filer

(Mark one)

1701AIF July 1999 (ENCS)

(To be accomplished & filed with BIR Form No. 1701 unless taxpayer opted for Optional Standard Deduction)

For Self-Employed and Professional Individuals/ Estate and Trusts (Engaged in Trade or Business) 1

PSOC:

Self-Employed

Professional

Estate

Spouse

Ba c k g r o u n d I n f o r m a t i o n Taxpayer

3

Identification No. Taxpayer's Name (Name of Decedent / Trust Account) (Last Name, First Name, Middle Initial for Individuals)

4 4 5

Name of Administrator / Trustee

(If Individual, Last Name first, follow ed by First Name and Middle Initial)

5 6A Method of Inventory Valuation (Specify)

6B Method of Bookkeeping Manual

Part II

6C Kind of Books Registered

Computerized

Incom e

Loose-leaf

Bound

State m e nt Com parative Previous Year

7

Gross Sales/Revenues/Receipts/Fees

8 9 10

Share from General Professional Partnership Income Less: Sales Returns and Allow ances Sales Discounts

7B 8B 9B 9D

Net Sales/Revenues/Receipts/Fees (Item 7 and 8 less Item 9)

10A

10B

11A 12A

11B 12B

Gain from Sales / Exchanges of Stocks Other Income (Schedule 5)

13A 14A 15A 16A

13B 14B 15B 16B

Total Gross Income (Sum of Items 12 to 16)

17A

17B

18A 19A 20A 21A

18B 19B 20B 21B

22 Outside Services

22A

22B

23 Advertising

23A

23B

24 Rental

24A

24B

25 Insurance

25A

25B

26 Royalties

26A

26B

27 Repairs and Maintenance

27A

27B

28 Representation and Entertainment

28A

28B

29 Transportation and Travel

29A

29B

30 Fuel and Oil

30A

30B

31 Communication, Light and Water

31A

31B

32 Supplies 33 Interest 34 Taxes and Licenses (Schedule 2)

32A 33A 34A

32B 33B 34B

35 Losses

35A

35B

36 Bad Debts

36A

36B

37 Depreciation

37A

37B

38 Amortization of Intangibles

38A

38B

39 Depletion

39A

39B

40 Charitable Contribution

40A

40B

41 Research and Development

41A

41B

42 Amortization of Pension Trust Contribution

42A

42B

43 Miscellaneous

43A

11 12

Current Year

7A 8A 9A 9C

Less: Cost of Sales/Services (Schedule 1) Gross Profit from Operations (Item 10 less Item 11) Add: Non-operating Income 13 14 15 16

17

Gain from Sales / Exchanges of Real Properties (Sch.4) Gain fro m Sales / Exchanges o f Other Fixed A ssets,Scrap, etc.

Less: Expenses 18 19 20 21

44 45

Salaries and Allow ances Fringe Benefit SSS, GSIS, Medicare, HDMF and Other Contributions Commission

Total Expenses (Sum of Items 18 to 43) Net Income/ (Loss) (Item 17 Less Item 44)

126 | P a g e

44A 45A

43B 44B 45B

Trust

BIR Form 1701AIF (ENCS) - Page 2 Part III Assets Current Assets

Ba l a n c e Sh e e t

46

Cash on Hand and in Banks

46A

46B

47

Marketable Securities

47A

47B

48 49

Accounts Receivable - Trade

48A

48B

49A

49B

50

Net Accounts Receivable - Trade

50A

50B

51A

51B

Beginning

Less: Allow ance for Bad Debts

51 Other Receivables Inventory 52 Finished Goods / Merchandise

Ending

52A

52B

53 Goods in Process

53A

53B

54 Raw Materials

54A

54B

55 Supplies

55A

55B

56

Total Inventory (Sum of Items 52 to 55)

56A

56B

57

Prepayments

57A

57B

58A

58B

59 Stocks and Bonds

59A

59B

60 Real Estate

60A

60B

61 Others

61A

61B

62 Total Long-Term Investments (Sum of Items 59 to 61) Fixed Assets

62A

62B

63

Land

63A

63B

64

Building

64A

64B

65 Less: Accumulated Depreciation

65A

65B

66 Net Book Value - Building

66A

66B

Other Depreciable Assets

67A

67B

68 Less: Accumulated Depreciation

68A

68B

69 Net B o o k Value - Other Depreciable A ssets (Item 67 less Item 68)

69A

69B

Fixed Asset - Appraisal Increase

70A

70B

71 Less:Accum. Dep'n-Appraisal Increase 72 Net Book Value (Item 70 less Item 71)

71A

71B

72A

72B

73

Total Fixed Assets (Sum of Items 63, 66, 69 & 72)

73A

73B

74

Other Assets

74A

74B

75A

75B

76A

76B

77A

77B

78 Total Current Liabilities (Sum of Items 76 & 77) Long-Term Liabilities

78A

78B

79 Long-Term Debts Deferred Credits / Other Liabilities

79A

79B

80

58 Total Current Assets (Sum of Items 46, 47, 50, 51, 56 & 57) Long-Term Investments

67

70

75 Total Assets (Sum of Items 58, 62, 73 & 74) LIABILITIES AND OWNER'S EQUITY Current Liabilities 76 Accounts Payable - Trade 77 Other Payables

Deferred Credits/Other Liabilities

80A

80B

81 Total Liabilities (Sum of Items 78 to 80) Owner's Equity

81A

81B

82

Balance, January 1

82A

82B

83

Additional Investment/Donated Capital

83A

83B

84

Net Income/(Loss)

84A

84B

85

Appraisal Capital

85A

86

Draw ings

86A

85B 86B

87

Balance, December 31 (Sum of Items 82 to 85 less Item 86)

87A

87B

88 Total Liabilities and Ow ners Equity ( Sum of Items 81 and 87) 88A Schedule 1 BREAKDOWN OF COST OF SALES/SERVICES A.

For Trading Entity:

89 90

Merchandise Inventory, Beginning Add: Purchases 9 1A / B 9 1C / D 9 1E / F 9 1G / H

Add: Freight In Less: Purchase Returns and Allow ances Purchase Discounts Net Purchases

88B

89A 90A

89B 90B

91A

91B

91C

91D

91E

91F

91G

91H

92

Goods Available for Sale (Sum of Items 89 & 91D)

92A

92B

93

Less: Merchandise Inventory, Ending

93A

93B

94

Total Cost of Sales (Item 92 less item 93)

94A

94B

127 | P a g e

BIR Form 1701AIF(ENCS) - Page 3 BREAKDOWN OF COST OF SALES/SERVICES (continuation) B. 95

For Manufacturing Entity: Raw Materials Inventory, Beginning

96

Add: Purchases

95A 96A

95B

97A/B Add: Freight In

97A

97B

97C/D Less: Purchase Returns and Allow ances Purchase Discounts 97E/F

97C

97D

97E

97F

97G/H Net Purchases

97G

97H 98B

96B

98

Raw Materials Available For Use (Sum of Items 95 & 97 )

98A

99

Less: Raw Materials Inventory, Ending

99A

99B

100A

10 0 B

100 Total Raw Materials Used ( Item 98 less Item 99) 101 Direct Labor

101A

10 1B

102 Manufacturing Overhead: 103 Supervision & Indirect Labor

103A

10 3 B

104

Supplies

104A

10 4 B

105

Rental

105A

10 5 B

106

Outside Services

106A

10 6 B

107

Communication, Light & Water

107A

10 7 B

108

Taxes and Licenses (Schedule 2)

108A

10 8 B

109

Depreciation

109A

10 9 B

110

Others

110A

110 B

111 Total Manufacturing Overhead (Sum of Items 103 to 110) 112 Total Manufacturing Costs (Sum of Items 100, 101 & 111)

111A

111B

112A

112 B

113

Add: Work in Process, Beginning

113A

113 B

114

Less: Work in Process, Ending

114A

114 B

115 Total Cost of Goods Manufactured 116 Add: Finished Goods Inventory, Beginning

115A

115 B

116A

116 B

117

Less: Finished Goods Inventory, Ending

117A

117 B

118 Total Cost of Goods Manufactured & Sold C. For Service Entity: 119 Direct Charges - Salaries, Wages & Benefits 120 Direct Charges - Materials & Supplies

118A

118 B

119A

119 B

120A

12 0 B

121 Direct Charges - Rental 122 Direct Charges - Depreciation (Schedule 4) 123 Direct Charges - Outside Services

121A

12 1B

122A

12 2 B

123A

12 3 B

124 Direct Charges - Others 125 Total Cost of Services (Sum of Items 119 to 124)

124A

12 4 B

125A

12 5 B

Schedule 2 Kind of Tax

Schedule of Taxes and Licenses Official Receipt No. Date Paid 126C

Amount

126A

126B

127A

127B

127C

127D

128A

128B

128C

128D

129A

129B

129C

129D

130A

130B

130C

130D

131A

131B

131C

131D

132A

132B

132C

132D

133A

133B

133C

133D

134A

134B

134C

134D

126D

135 Total

135D

Schedule 3 Property

Schedule of Incom e - producing Properties Nature of Income

Amount of Income

136A

136B

13 6 C

137A

137B

13 7 C

138A

138B

13 8 C

139A

139B

13 9 C

140A

140B

14 0 C

141A

141B

14 1C

142A

142B

14 2 C

143A

143B

14 3 C

144A

144B

14 4 C

145

Total

128 | P a g e

145

BIR Form No. 1701AIF (ENCS) - Page 4 Schedule 4

Sales / Exchanges of Real Properties - (Attach Additional Sheets, if Necessary) Description of Property

Selling Price/Fair Market Value

Costs & Expenses/Book Value

Gain / (Loss)

Creditable Tax Withheld

Capital Gains Tax Paid

146A

146B

146C

146D

146E

146F

147A

147B

147C

147D

147E

147F

148A

148B

148C

148D

148E

148F

149A

149B

149C

149D

149E

149F

150A

150B

150C

150 Total Schedule 5

Schedule of Other Income (Note: If income is tax-exempt, place an "X" under the Exempt column) Amount of Income Creditable Tax Withheld Final Tax Withheld /Paid

Nature of Income

Exempt

151 Interest

151A

151B

151C

151D

152 Rental

152A

152B

152C

152D

153 Fees/Commission

153A

153B

153C

153D

154 Dividend

154A

154B

154C

154D

155

155A

155B

155C

155D

156

156A

156B

156C

156D

157

157A

157B

157C

157D

158 Total

158A

158B

158C

158D

Income from Other Sources:

Schedule 6

Payments to Heirs/Beneficiaries (Attach Additional Sheets if Necessary)

( For Estates and Trusts ) Name

TIN

Amount

Tax Withheld

159A

159B

159C

159D

160A

160B

160C

160D

161A

161B

161C

161D

162A

162B

162C

162D

163A

163B

163 Total

I declare, under the penalties of perjury, that this return has been made in good faith, verif ied by me, and to the best of my knowledge and belief, is true and correct, pursuant to the provisions of the National Internal Revenue Code, as amended, and the regulations issued under authority thereof. 164 Taxpayer's Signature Over Printed Name Note: Attach additional sheets, if necessary * If Taxpayer's income is from long-term contracts, the tax return shall, likewise, be accompanied by Certif icates of Percentage of Completion during the taxable year of the projects performed under existing contracts issued and signed by the Architect or Engineer. * Husband and wif e earning business and/or professional income shall accomplish separate Account Information Forms (Form 1701AIF-1) for their respective businesses/professions. * Attach additional sheets to the Income Tax Returns and Account Information Forms, if necessary

129 | P a g e

Appendix I (To be filled up by the BIR) DLN:

PSIC: BIR Form No.

Monthly Percentage Tax Return

Republika ng Pilipinas Kagawaran ng Pananalapi

Kaw anihan ng Rentas Internas

2551M September 2005 (ENCS)

Fill in all applicable spaces. Mark all appropriate boxes with an “X”. 1

For the

2

Calendar

Fiscal

Year ended (MM/YYYY)

3 For the month

4

Amended Return

(MM/YYYY)

Part I

Yes

Ba c k g r o u n d

5 Number of sheets attached No

Inform ation

6

TIN

9

Occupation Taxpayer's Name (For Individual)Last Name, First Name, Middle Name/(For Non-individual) Registered Name

7 RDO Code

8 Line of Business/ 10

11 Registered Address

12

13 Are you availing of tax relief under Special Law or International Tax Treaty? Yes Part II

No

Zip Code

If yes, specify

Com putation of Tax Taxable Transaction/ Industry Classification

A TC

Taxable Amount

Tax Rate

Tax Due

14A

14B

14C

14D

14E

15A

15B

15C

15D

15E

16A

16B

16C

16D

16E

17A

17B

17C

17D

17E

18A

18B

18C

18D

18E

19 Total Tax Due 20 Less: Tax Credits/Payments

21

Telephone Number

19

20A

Creditable Percentage Tax Withheld Per BIR Form No. 2307 (See Schedule 1)

20A

20B

Tax Paid in Return Previously Filed, if this is an Amended Return

20B

Total Tax Credits/Payments (Sum of Items 20A & 20B)

22 Tax Payable (Overpayment) (Item 19 less Item 21) 23 Add: Penalties Surcharge 23A 23B

21 22

Interest

Compromise 23C

23D

24 Total Amount Payable/(Overpayment) (Sum of Items 22 and 23D)

24

If overpayment, mark one box only: To be Refunded To be issued a Tax Credit Certificate I declare, under the penalties of perjury, that this return has been made in good faith, verified by me, and to the best of my know ledge, and belief, is true and correct, pursuant to the provisions of the National Internal Revenue Code, as amended, and the regulations issued under authority thereof. 25 26 P resident/Vice P resident/P rincipal Officer/A ccredited Tax A gent/ A utho rized Representative/Taxpayer (Signature Over P rinted Name) Title/P o sitio n o f Signato ry

TIN o f Signato ry

Tax A gent A cc. No ./A tty's Ro ll No .(if applicable) Date o f Issuance

Part III Particulars

Treasurer/A ssistant Treasurer (Signature Over P rinted Name)

Title/P o sitio n o f Signato ry

Date o f Expiry

TIN o f Signato ry

Details of Paym ent Draw ee Bank/ Agency

2 7 Cash/B ank 2 7 A

Num ber

MM

Stamp of

Date DD YYYY

Am ount

27B

27C

27D

Receiving Office/AAB and Date of Receipt (RO's Signature/

28B

28C

28D

Bank Teller's Initial)

29B

29C

30C

30D

Debit Memo 28 Check 2 8 A 29 Tax Debit Memo 30 Others 3 0 A

29A 30B

Machine Validation/Revenue Official Receipt Details (If not filed w ith an Authorized Agent Bank)

130 | P a g e

Appendix J (To be filled up the B IR)

DLN:

Payment Form

Republika ng Pilipinas Kagaw aran ng Pananalapi

BIR Form No.

0605-101

For No Audit Program (NAP)

Kawanihan ng Rentas Internas

APRIL 2005

Fill in all applicable spaces. Mark all appropriate boxes with an "X" 1

Date ( MM / DD / YYYY )

2 For the

Calendar

3 Tax Type

Fiscal

4 RDO Code

5 A TC

Year Ended ( M M /YYYY)

6

PSIC

7 Line of Business/Occupation

PSOC

Part I

Ba c k g r o u n d

8 Taxpayer Identification No.

Inform ation

9 Taxpayer Classification I

10 Taxpayers

NI

(Last Name, First Name, Middle Name for Individuals) / (Registered Name for Non-Individuals) 11 Telephone No.

Name 12 Registered Address

13 Zip Code

Part II 14

Com putation 14

Total Amount of Payment

Voluntary Payment

S t a m p o f R e c e iv ing O f f ic e

This is to acknowledge that as part of our participation in the Bureau of Internal Revenue's No Audit Program (NAP), the private sector is making an additional voluntary payment in the amount specified in this form.

a nd D a t e o f R e c e ipt

It is understood that such additional payment is voluntarily made to meet the growth ratio and ratio required for a taxpayer to be considered compliant with the requirement of this program. It is likewise, agreed that, no claims for refund or tax credit nor will the amount be deducted from taxable income will be made in the future covering said additional voluntary payment. I declare, under the penalties of perjury, that this document has been made in good faith, verified by me, and to the best of my knowledge and belief, is true and correct, pursuant to the provisions of the National Internal Revenue Code, as amended, and the regulations issued under authority thereof. 15

Signature over Printed Name of Taxpayer /Authorized Representative Part III

D e t a i l s of P a y m e n t

Particulars 16

Title/Position of Signatory

Draw ee Bank/Agency 16A

Number 16B

17C

MM 16C

Machine Validation/Revenue Official Receipt Details (If not filed w ith the bank)

Taxpayer Classification:

131 | P a g e

I - Individual

N I - Non-Individual

DD

Amount

Y 16D

Appendix K

Articles of Partnership

General Partnership

ARTICLES OF PARTNERSHIP

OF

NABAGO STORE (Partnership Name)

KNOW ALL MEN BY THESE PRESENTS:

That

we, the undersigned partners, all of legal age, residents and citizens of

the

Philippines, have on this day voluntarily associated ourselves together for the purpose of forming a general partnership under the following terms and conditions and subject to existing and applicable laws of the Republic of the Philippines:

AND WE HEREBY CERTIFY:

ARTICLE I. Partnership Name: That

the

name

of

this

be L²C³ Enterprise and shall transact business under the said company name. 132 | P a g e

partnership

shall

ARTICLE II. Business Purpose: That the purpose/s for which this partnership is formed is/are:

ARTICLE III. Principal Place of Business: That the principal place of business of this partnership shall be located at:

…. (complete address)

ARTICLE IV.

Term of Existence: That this partnership shall have a term of

_________ years from and after the original recording of its Articles of Partnership by the Securities and Exchange Commission.

Articles of Partnership

ARTICLE V. Partners’ Circumstances: That the names, nationalities and complete residence addresses of the partners are as follows:

133 | P a g e

Name Nationality Complete Residence Address

ARTICLE VI. Capital Contributions: That the capital of this Partnership shall be the amount of ____________ (P_________), Philippine Currency, contributed in cash by the partners, as follows:

Name Amount Contributed

That no transfer of interest which will reduce the ownership of Filipino citizens to less than the required percentage of capital as provided by existing laws shall be allowed or permitted to be recorded in the proper books of the partnership.

134 | P a g e

ARTICLE VII. Sharing Ratios: That the profits and losses of this partnership shall be divided and distributed proportionately on the ratio of the capital contribution of each partner.

ARTICLE IX. Management: That this partnership shall be under __________, as General Manager, who shall be in charge of the management of the affairs of the company. He shall have the power to use the partnership name and in otherwise performing such acts as are necessary and expedient in the management of the firm and to carry out its lawful purposes.

ARTICLE X. Undertaking to Change Name: That the partners undertake to change the name of this partnership, as herein provided or as amended thereafter, immediately upon receipt of notice or directive from the Securities and Exchange Commission that another corporation, partnership or person has acquired a prior right to the use of that name or that the name has been declared as misleading, deceptive, confusingly similar to a registered name, or contrary to public morals, good customs or public policy.

Articles

of

Partnership

IN WITNESS WHEREOF, we have hereunto affixed our signatures this ____ day of ______, 20___, at ________.

______________________ (name of partner) TIN

______________________ 135 | P a g e

_______________________ (name of partner) TIN

_______________________

(name of partner)

(name of partner)

TIN

TIN

______________________ (name of partner) TIN

(Names and Signatures of the partners and TIN)

ACKNOWLEDGEMENT

REPUBLIC OF THE PHILIPPINES) ____________________________) S.S.

BEFORE ME, a Notary Public, for and in _________________, this ____day of _________, 20___, personally appeared the following persons:

Name

136 | P a g e

TIN/ID/Passport No.

Date & Place Issued

known to me and to me known to be the same persons who executed the foregoing Articles of Partnership constituting of _____pages, including this page where the acknowledgement is written, and they acknowledged to me that the same is their free and voluntary act and deed. WITNESS MY HAND AND SEAL on the date and place above written.

NOTARY PUBLIC Doc. No.

______;

Page No.

______;

Book No.

______;

series of 20 ______.

137 | P a g e