Professional Documents
Culture Documents
Guillermo B. Bonghanoy
Competencies
– Differentiate Mark-on, Mark down and Mark-up
– Illustrate how Mark-on, Mark-down, and Mark-up
are obtained
– Differentiate mark-up from margins
– Describe how gross margins is used in sales
– Illustrate how to compute single trade discounts
and discount series
Competencies
– Differentiate profit from loss
– Illustrate how profit is obtained and how to avoid
loss in a given transaction
– Define break-even; illustrate how to determine
break-even point
– Solve problems involving buying and selling
products
Competencies
– Illustrate how interest is computed specifically as
applied to
• mortgage,
• amortization,
• services/utilities and
• on deposits and loans
Competencies
– Compute commissions on cash basis and
commission on installment basis
– Illustrate how to obtain down payment, gross
balance, and current increased balance
– Solve problems involving interests and
commissions
Mark on
• Mark – on is the amount added to the original
cost of the goods to be sold.
• The new price is called, the tag price, or the
selling price
• The Mark – on therefore is the difference
between the selling price and the original cost
of the merchandise.
Examples
No. SP CG MO MOR
TD = 3 0 0 0 0 [1 - [ (1 - .1 0 ) (1 - .0 5 ) ]
= 3 0 0 0 0 [1 - ( .9 0 ) ( .9 5 ) ]
= 3 0 0 0 0 ( .1 4 5 ) = 4 , 3 5 0
NP = 30000 - 4350 = 25, 650
Profit
• Profit is defined as the difference between the
revenues or the sales and the operational
cost. When business earns profits, it has the
potential to grow in terms of scope. Many
businesses in the Philippines are earning much
profit because of its capacity and capability to
attract customers. Some have ventured into
more advertisements in order to attract
buyers.
Profit
• Several studies had shown that companies
who ventured into better advertising schemes
had their businesses in the upfront.
Profit
• When the difference of the revenues and the
operational costs is zero, then the business is in
a break – even.
• Break – even point is the amount where the
revenues or sales are equal to the operational
and other related costs.
• However, when the difference of the revenues
and the operational costs is negative, then the
business is at a loss.
Points to Ponder
Today, more and more retail stores
are popping up like mushrooms in
order to generate better share in the
market. However, these business
activities are slowly killing the
concepts of little stores like the Sari
– Sari stores.
What do you think?
Income Statement
Terms Components and Formula
Net Revenues (Sales) – Operating
Income Expenses
(Profit) The revenues or sales are the once
earned by businesses in forms of
cash or credit. The expenses
incurred in the duration of the
business is called operating
expenses.
Income Statement
Terms Components and Formula
Gross Net Sales – Cost of Goods Sold
Profit The sales discounts, returns and the
allowances are deducted from the gross
sales in order to generate Net Sales.
o Cash discounts are given as gestures for
early payment or prompt payments of
accounts
o Sales returns are those goods that are
returned or sent back to the supplier due
to damages and the like.
Income Statement
Terms Components and Formula
Gross Net Sales – Cost of Goods Sold
Profit o Sales allowance is reduced price of the
damaged goods that are kept by buyer
The cost of goods sold is actually the cost
of the items being sold during its
acquisition.
The process of determining the cost of
goods before the period of the business
activity is called the beginning inventory,
while the process of determining the cost
of goods at the end of the business activity
is called the ending inventory.
Income Statement
Terms Components and Formula
Cost of Beginning Inventory + Purchases – Ending
Goods Sold Inventory
Net Profit Gross Profit – Operating Expenses
Operating expenses is the expenses
incurred in the operation of the business.
If the net profit is negative, then the
business is not earning. It just incurred a
loss.
Name of Store
Income Statement
Period
Revenues
Gross Sales PPPPPPPPP
Less: Discounts, Returns and Sales PPPPPPPPP
Allowances
Net Sales PPPPPPPPP
Less: Cost of Goods Sold
Beginning Inventory PPPPPPPPP
Add: Purchases PPPPPPPPP
Goods available for Sale PPPPPPPPP
Ending Inventory PPPPPPPPP
Total Cost of Goods Sold PPPPPPPPP
Gross Profit From Sales PPPPPPPPP
Less: Operating Expenses
Salaries, Rents, Utilities, Miscellaneous PPPPPPPPP
Total Operating Expenses PPPPPPPPP
Net Income (Profit) PPPPPPPPP
Examples
• Prepare an income statement for Bong’s
Hardware for its second quarter of operations for
2015. The following are the available
information:
Revenues : PHP 289,000.00
Cost of Goods Sold : PHP 125,000.00
Operating Expenses : PHP 100,000.00
Bong’s Hardware
Income Statement
For the Second Quarter Ended June 30, 2015
Revenues (Sales) 289,000.00
Less: Cost of Goods Sold 125,000.00
Gross Profit from Sales 164,000.00
Less: Operating Expenses 100,000.00
Net Income (Profit) 64,000.00
• Find the gross profit and the net income of El
Matador’s Grocery Shop for the Third Quarter of
the year 2015, with the following information:
Revenues : 900,000.00
Sales Returns, Discounts and
Allowances : 12,000.00
Beginning Inventory : 422,000.00
Purchases : 212,000.00
Ending Inventory : 189,000.00
Expenses :
Salaries : 156,000.00
Rentals : 13,000.00
Utilities : 15,000.00
Miscellaneous : 113,000.00
El Matador’s Grocery Shop
Income Statement
For the Third Quarter Ended September 30, 2015
Gross Sales 900,000.00
Less: Discounts, Returns and 12,000.00
Sales Allowances
Net Sales 888,000.00
Cost of Goods Sold
Beginning Inventory 422,000.00
Add: Purchases 212,000.00
Goods available for Sale 634,000.00
Ending Inventory 189,000.00
Cost of Goods Sold 445,000.00
Gross Profit From Sales 443,000.00
El Matador’s Grocery Shop
Income Statement
For the Third Quarter Ended September 30, 2015
Gross Profit From Sales 443,000.00
Operating Expenses
Salaries 156,000.00
Rents 13,000.00
Utilities 15,000.00
Miscellaneous 113,000.00
Total Operating Expenses 297,000.00
Net Income (Profit) 146,000.00
Interest
In several business activities, a business entity or an
individual may lend money also to a businessman,
another individual or even an enterprise. Several
examples include the following:
– A government controlled corporation or a bank offering
mortgages on vehicles, and housing.
– A bank lends money to businessmen, the country or a
private individual.
– Micro – lending corporations offer lending series to small
groups of women, men or even sari – sari stores.
– A private individual offers financial lending to workers,
store owners or private employees.
Interest
• In our study on basic mathematics, we learn about
interest. We had simple interests and the
compound interest.
• In our attempts to define interest in this part of the
book, we will put concentration on the activities
that involve mortgages, amortization of a loan,
payment of services and utilities, and deposits.
But what is interest? How do we define it from the
lender’s and the borrower’s perspectives?
Interest
• For the lender’s perspective, interest is an
income from the money lent, while for the
borrowers perspective, interest is the cost
paid for the use of money.
Mortgage
• Mortgage is a legal agreement that conveys the
conditional right of ownership on an asset or property
by its owner (the mortgagor) to a lender (the
mortgagee) as security for a loan. This means that a
mortgage is an instrument of a debt that is secured by
the collateral of a specified real estate property so
that the borrower can be obliged to pay back with a
predetermined set of payments.
17.3
Figures in Millions
18
16
16 14.5
14
14
12
12
9.2 9.1
10 8.8
6
Expenditures (In Millions)
0
2008 2009 2010 2011 2012
Year