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Notes Business Math

The document contains an income statement and other accounting documents for a merchandising business. It shows the business's gross sales, returns, discounts, net sales, purchases, returns, discounts, net purchases, cost of goods sold, gross profit, other income, operating expenses, net income. It also contains explanations and formulas for concepts like mark-on, mark-up, mark-down, trade discounts, mortgage, amortization, and statements of cash flows.

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gelicametristan
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8 views

Notes Business Math

The document contains an income statement and other accounting documents for a merchandising business. It shows the business's gross sales, returns, discounts, net sales, purchases, returns, discounts, net purchases, cost of goods sold, gross profit, other income, operating expenses, net income. It also contains explanations and formulas for concepts like mark-on, mark-up, mark-down, trade discounts, mortgage, amortization, and statements of cash flows.

Uploaded by

gelicametristan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Income Statement (Merchandising)

Gross Sales P 782,000


Sales Ret. & Allow. P 32,000
Sales Discount 48,000 (80,000)
Net Sales P 702,000

Purchases P 220,000
Pur. Ret. & Allow. P 34,000
Purchase Discount 26,000 (60,000)
Net Purchases P 160,000
Freight-in 10,000
Net Cost of Purchases 170,000
Merchandise Inventory, Beginning 180,000
Goods Available for Sale 350,000
Merchandise Inventory, End 120,000
Cost of Sales (230,000)
Gross Profit 472,000
Interest Income P 30,000
Rent Income 20,000 50,000
Total Income / Gross Sales 522,000

Operating Expenses
-Distribution Expense
Sales Salaries Expense P 52,000
Depreciation Exp. – Store Equip. 7,800
Utilities Exp. – Store 6,000 P 65,800
-Administrative Expense
Office Salaries Expense P 34,000
Utilities Expense 4,400
Office Supplies 3,000
Bad Debts Expense 2,000 P 43,400
-Other Expenses
Loss on Sale of Equipment P 1,600
Discount Lost 1,000 P 2,600
-Finance Cost
Interest Expense P 2,400 P 2,400 (144,200)
Net Income 407,800
MARK-ON, MARK UP, MARK DOWN Margins
Margin is an amount of gross profit made
MARK ON when an item is sold. Gross margin is the difference
MO = Mark-On between what an item costs and for what it sells.
CG = Cost of Goods
SP = Selling Price
MOR = Mark on Rate
Formula;

MO =
MO =

MOR =

SP =
TRADE DISCOUNT & DISCOUNT SERIES
CG =
Simple Discount
MARK-UP
It is the amount or percentage that is
MU = Mark-Up
deducted from the selling price of a product, that
OCG = Original Cost of Goods
retailers offer discounts to customers.
NSP = New Selling Price
MUR = Mark-up Rate
Trade Discount
Formula;
A percentage from the list price of a product
MU = that a manufacturer gives to resellers when they buy
MU = his or her product.
NSP =

MUR=

OCG=

MARK DOWN
MD = Mark Down
PSP = Previous Selling Price
NSP = New Selling Price
MDR = Mark Down Rate
Formula;

MD =
MD =
NSP =

MDR =

PSP =
MORTGAGE & AMORTIZATION

Mortgage
It is probably the biggest loan one can have.
It is usually obtained for a house, a house and lot, or
for a machinery or equipment.
– Mortgage Loan
- You use your property as a collateral for
Loan.

– Down Payment
- Certain percent of the purchase price of
the property

*The installment payment on the Loan is termed


Amortization

Formula;

Amortization Table

Payment Ammount Principal Interest Balance


(Monthly (A - I) (Prev. Bal. (Prev. Bal.
Ammortization) X MIR) - Principal)

Compound Interest;

A = final amount
P = initial principal
balance
r = interest rate
n = number of times interest applied per time
period

So on and so forth….

t = number of time periods elapsed


STATEMENT OF CASHFLOW Madam Lalisa Manoban established her own service
company. She invested 2,000,000 to open the business and has
(DIRECT METHOD)
purchased some computer equipment worth 120,000 and office
furniture worth 80,000. During the year, 500,000 revenues
Operating Activities (Net Income Activities) were earned, 200,000 of which were on account. Salaries paid
- Cash Inflows to employees amounted to 150,000, office rent payment is
A. Cash received from sales and service revenue 40,000, and utilities paid amounted to 30,000. Receivables
collected amounted to 70,000. The owner withdrew 100,000
B. Collection of accounts receivable for a personal emergency. At the time when the carrying value
C. Refunds from suppliers of the furniture was 70,000, Madam Lisa sold it for 75,000 cash.

- Cash Outflows
A. Payments to suppliers Convert to T-Account
B. Payment of operating expenses like salaries,
rent, Utilities, and Taxes
C. Payment for interest expense
D. Charity Contributions
E. Cash refund to customers

Investing Activities (Non-Current Assets Activities)


- Cash Inflows
A. Cash proceeds from selling productive assets
like Property, Plant, and Equipment
B. Cash proceeds from selling investments in
equity securities of other companies

- Cash Outflows
A. Payments for the purchase of productive assets
like Property, Plant, and Equipment
B. Payments to acquire investments inequity
securities

Financing Activities (Non-Current Liabilities &


Equity activities)
- Cash Inflows
A. Cash investments by the owner
B. Cash proceeds from issuance of share capital
C. Cash proceeds from long-term borrowing

- Cash Outflows
A. Cash withdrawal by the owner
B. Payments of cash dividends to shareholders
C. Payments

Note:
If you pay the principal amount of your long-
term borrowing it is under FINANCING ACTIVITIES but,
if you pay for the interest of the borrowing, it is under
OPERATING ACTIVITIES.
STATEMENT OF CASHFLOW
(INDIRECT METHOD)

The indirect method of statement of cash flows is


prepared in the following manner:
 The presentation of cash flows from operating
activities starts with net income, adjusted with
non-cash expenses and changes in working
capital.

Working Capital = Current Assets - Current Liabilities

 The presentation of cash flows from investing


and financing activities works the same way as
that of the direct method.


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