Student Life Generally Business Plan

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

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

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

iii. Another benefit is that being a franchise store for a large company such as Samsung, the store will be able to obtain better and higher access to finance compared to other start businesses. For instance, the bank will be quite willing to give out loans or credit to the store (Kurtz and Boone, 2009).

The store which will be a franchise will be run by a manager. This manager will be required to have more than ten years' worth of experience in the retail management sector. Such proficiency of the industry and what is expected is necessary for the company to have profitability in terms of its operations in the first year of business. Aside from the manager, the store will also have a trained staff that will consist of ten salaried employees and five non-salaried employees. The salaried employees will be responsible for the inventory, marketing and sales of the products and services. The non-salaried employees on the other hand will be responsible for the minor chores and duties and will be paid based on the number of hour they work.

Chart Accounts

1. Asset Accounts

No.

Account Title

Balance Type

Explanation of Account

Cash

Debit

Checking account balance from checks and currency received from clients but is yet to be deposited.

Accounts Receivable

Debit

These are monies owed to the company for the products sold and services provided but no payment yet Merchandise Inventory

Debit

This is the expense incurred for purchasing merchandise which is not yet sold.

Supplies

Debit

Expenditure incurred for supplies which are yet to be used. The supplies expense account is used for supplies already used.

Prepaid Insurance

Debit

Insurance expense that is paid before hand

Prepaid Rent

Debit

Rent expense that is paid in advance. The normal cost of rent is recorded in the rent expense account.

2. Liability Accounts

No.

Account Title

Balance Type

Explanation of Account

Accounts payable

Credit

Amount of money owed to the suppliers who make provisions for goods and services for the store but are not paid in cash on delivery

Notes payable

Credit

The amount of money in principal terms for promissory payment. Loans obtained from the banks are included here.

Interest payable

Credit

For the amount owed for interest on the principle amount up to the date of the balance sheet on the fiscal period.

Wages payable

Credit

Amount that is owed to the workers of the store for the working hours completed but yet to be paid.

3. Operating Revenue Accounts

Product Revenues

Credit

Amounts earned from retailing products to clients, either in credit or in cash. If sold in cash, this particular account increases and so does the cash account. If sold on credit, this account increases and so does the accounts receivable account.

Service Revenues

Credit

Amounts earned from providing services to clients, either in credit or in cash. If paid in cash, this particular account increases and so does the cash account. If paid on credit, this account increases and so does the accounts receivable account.

4. Operating Expense Accounts

Wages expense

Debit

Cost incurred for work undertaken by non-salaried workers during the fiscal period.

Salaries expense

Debit

Cost incurred for work undertaken by salaried workers during the fiscal period.

Rent expense

Debit

Expense for occupying the rented facilities for the fiscal period.

Supplies expense

Debit

Expense for supplies in the fiscal period.

Advertising expense

Debit

Expense incurred for promotions and advertisements and marketing during the fiscal period.

Utilities expense

Debit

Expense for water, electricity, and sewer for the fiscal period.

Pro forma Balance Sheet and Income Statement

1. Pro forma Income Statement

Pro forma Balance Sheet
ASSETS

Cash

48,000

Accounts receivable

92,000

Inventory

32,670

Supplies

13,240

Prepaid Insurance

5,730

Prepaid rent

22,600

214,240

LIABILITIES

Accounts payable

122,540

Notes payable

50,000

Interest payable

8,500

Wages payable

33,200

214,240

Accounting Methods

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

Internal Control Recommendations

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

i. Counting the entire inventory coming in. This ensures that errors are avoided in the inventory records.

ii. Once this is done, the inventory coming in should be inspected. This is to ensure that the merchandise coming in is the right one and there is no damaged product or merchandise.

iii. Another key aspect of internal inventory control will be to undertake reviews of inventory from time to point out some of the obsolete merchandise and also to free up storage space for new and incoming inventory.

iv. There has to be an employee who signs off on the products or merchandise that are removed or obtained from the warehouse. This is to increase the level of responsibility and also to avoid any instances of theft.

v. If there are any instances of a negative inventory balance, it is important to undertake an investigation to find out exactly where the problem arises and rectify it (Trennery, 1999).

Impact of the Regulatory Environment

With the legislation of the Sarbanes-Oxley Act, companies that are publicly traded in the United States are expected to employ and implement greater extents of oversight over company information and the procedures employed to connect this info to financial accounting statements. This particular Act not only influences the financial aspect of companies, but it also has an impact on the IT divisions that have the responsibility of storing and managing the electronic records of a company. This is the main way in which the Act will impact the retail store. This is for the reason that, the Sarbanes-Oxley Act does not stipulate how the company should store records but instead it outlines which financial records ought to be stored and for what period it should be stored. In accordance to the Act, Sunshine Electronics Retail Store will have to save all of its business records which encompass the electronic records and communications. If the store does not comply with this, then it will be fined or members of the retail store imprisoned or face both repercussions (Greggo and Kresevich, 2011).

Based on the rules and regulations of the management of financial records which are electronic, Sunshine Electronics Retail Store is expected to comply with the provisions of the Section 802 of Sarbanes-Oxley. To start with, the retail store will make sure to try and avoid any form of the damage, modification or fabrication of records so as to evade the subsequent punishments. Secondly, Sunshine Electronics Retail Store will have to retain the financial records for the period expected. The retail store will have to strongly store all business records by making use of the similar procedures set for public accountants (Millar, 2003).

References

Ernst & Young. (2013). International GAAP 2013: Generally Accepted Accounting Principles under International Financial Reporting Standards. Wiley.

Greggo, A., Kresevich, M. (2011). Retail Security and Loss Prevention Solutions. New York: Taylor and Francis Group.

Kurtz, D.L., Boone, L.E. (2009). Contemporary Business. Ohio: South Western Cengage.

Millar, J. (2003). An Investigation Into the Effects of the Sarbanes-Oxley Act on Firm and market values. Southern Illinois University.

Trenerry, A. (1999). Principles of Internal Control. Australia: University of New South Wales Press.