final performance task (application of basic financial budgeting & inventory system accounting)\ncase…

final performance task (application of basic financial budgeting & inventory system accounting)\ncase scenario: trendy threads clothing shop\nscenario\nyour group will act as the finance team for trendy threads clothing shop, a start - up selling ready - to - wear apparel. the shop is preparing its financial report for the ber months (oct - dec 2025). your task is to analyze transactions, prepare budgets, and compare results under the periodic and perpetual inventory systems.\nthe following transactions are projected for the following ber months:\nbeginning inventory (sep 30, 2025):\n● 500 pcs of assorted clothing @ p100 each = p50,000\npurchases (oct - dec 2025):\n● oct 5: 300 pcs @ p100 each - on credit\n● oct 20: 150 pcs @ p100 each - cash\n● nov 10: 200 pcs @ p100 each - on credit\n● nov 17: 250 pcs @ p100 each - cash\n● nov 30: returned 50 pcs @ p100 each\n● dec 10: 350 pcs @ p100 each - cash\nsales transactions (oct - dec 2025):\nselling price = p200 per piece\n● oct 15: sold 200 pcs in cash\n● oct 30: sold 125 pcs on credit\n● nov 15: sold 300 pcs in cash\n● nov 25: sold 100 pcs in cash\n● nov 30: sold 150 pcs on credit\n● dec 15: sold 250 pcs in cash\n● dec 20: sold 200 pcs on credit\n● dec 28: sold 175 pcs in cash\noperating expenses (monthly):\n● rent: p15,000\n● salaries: p20,000\n● utilities: p5,000\n● miscellaneous: p2,000\nending inventory (dec 31, 2025):\n● physical count: 200 pcs @ p100\nplease prepare the following reports:\npart a - periodic inventory system\nprepare the following:\n1. sales budget → compute total & net sales.\n2. purchases budget → show gross purchases, returns, and net purchases.\n3. operating budget → summarize expenses\n4. cogs schedule → based on the given inventory transactions\n5. projected income statement (oct - dec 2025).\n6. conclusion/analysis → overall possible performance of the business and give at least 2 recommendations.\npart b - perpetual inventory system\nprepare the following:\n1. prepare journal entries for all purchases, returns, sales (with cogs), and expenses.\n2. show inventory ledger (running balance of units & costs).\n3. verify that ending inventory matches the physical count.

final performance task (application of basic financial budgeting & inventory system accounting)\ncase scenario: trendy threads clothing shop\nscenario\nyour group will act as the finance team for trendy threads clothing shop, a start - up selling ready - to - wear apparel. the shop is preparing its financial report for the ber months (oct - dec 2025). your task is to analyze transactions, prepare budgets, and compare results under the periodic and perpetual inventory systems.\nthe following transactions are projected for the following ber months:\nbeginning inventory (sep 30, 2025):\n● 500 pcs of assorted clothing @ p100 each = p50,000\npurchases (oct - dec 2025):\n● oct 5: 300 pcs @ p100 each - on credit\n● oct 20: 150 pcs @ p100 each - cash\n● nov 10: 200 pcs @ p100 each - on credit\n● nov 17: 250 pcs @ p100 each - cash\n● nov 30: returned 50 pcs @ p100 each\n● dec 10: 350 pcs @ p100 each - cash\nsales transactions (oct - dec 2025):\nselling price = p200 per piece\n● oct 15: sold 200 pcs in cash\n● oct 30: sold 125 pcs on credit\n● nov 15: sold 300 pcs in cash\n● nov 25: sold 100 pcs in cash\n● nov 30: sold 150 pcs on credit\n● dec 15: sold 250 pcs in cash\n● dec 20: sold 200 pcs on credit\n● dec 28: sold 175 pcs in cash\noperating expenses (monthly):\n● rent: p15,000\n● salaries: p20,000\n● utilities: p5,000\n● miscellaneous: p2,000\nending inventory (dec 31, 2025):\n● physical count: 200 pcs @ p100\nplease prepare the following reports:\npart a - periodic inventory system\nprepare the following:\n1. sales budget → compute total & net sales.\n2. purchases budget → show gross purchases, returns, and net purchases.\n3. operating budget → summarize expenses\n4. cogs schedule → based on the given inventory transactions\n5. projected income statement (oct - dec 2025).\n6. conclusion/analysis → overall possible performance of the business and give at least 2 recommendations.\npart b - perpetual inventory system\nprepare the following:\n1. prepare journal entries for all purchases, returns, sales (with cogs), and expenses.\n2. show inventory ledger (running balance of units & costs).\n3. verify that ending inventory matches the physical count.

Answer

Explanation:

Step1: Calculate total sales quantity

Add up all the sales - quantity values from Oct - Dec 2025. $200 + 125+300 + 100+150+250+200+175 = 1500$ pcs

Step2: Calculate total sales revenue

Multiply total sales quantity by selling price per piece. $1500\times200=\text{P}300,000$

Step3: Calculate gross purchases quantity

Add up all the purchase - quantity values from Oct - Dec 2025. $300 + 150+200 + 250+50+350=1300$ pcs

Step4: Calculate gross purchases cost

Multiply gross purchases quantity by cost per piece. $1300\times100=\text{P}130,000$

Step5: Calculate net purchases

Since returns are 50 pcs at P100 each, net purchases cost is $130000-(50\times100)=\text{P}125,000$

Step6: Calculate cost of goods available for sale

Cost of beginning inventory + net purchases. $50000 + 125000=\text{P}175,000$

Step7: Calculate cost of goods sold (COGS)

Cost of goods available for sale - ending inventory cost. Ending inventory cost is $200\times100=\text{P}20,000$. So, $175000 - 20000=\text{P}155,000$

Step8: Calculate total operating expenses

Sum up monthly operating expenses for 3 months. $(15000 + 20000+5000 + 2000)\times3=\text{P}126,000$

Step9: Calculate projected net income

Total sales revenue - COGS - total operating expenses. $300000-155000 - 126000=\text{P}19,000$

Answer:

For Periodic Inventory System:

  1. Total sales: P300,000. Assuming no discounts or allowances, net sales = P300,000
  2. Gross purchases: P130,000, Returns: P5,000, Net purchases: P125,000
  3. Total operating expenses for 3 - month period: P126,000
  4. COGS: P155,000
  5. Projected income statement:
    • Revenue: P300,000
    • COGS: P155,000
    • Gross Profit: $300000 - 155000=\text{P}145,000$
    • Operating Expenses: P126,000
    • Net Income: P19,000
  6. Conclusion/Analysis: The business has a net income of P19,000 for the Oct - Dec 2025 period. Recommendations could include reducing operating expenses further, perhaps renegotiating rent or finding more cost - effective utility providers. Also, consider marketing strategies to increase sales volume as the profit margin seems relatively small considering the scale of operations.

For Perpetual Inventory System (partial example of journal entries):

  1. Purchase on Oct 5 (300 pcs on credit):
    • Debit: Inventory P30,000
    • Credit: Accounts Payable P30,000
  2. Purchase on Oct 20 (150 pcs cash):
    • Debit: Inventory P15,000
    • Credit: Cash P15,000
  3. Sale on Oct 15 (200 pcs cash):
    • Debit: Cash P40,000
    • Credit: Sales Revenue P40,000
    • Debit: Cost of Goods Sold P20,000
    • Credit: Inventory P20,000 Inventory Ledger would show running balance of units and costs after each transaction. To verify ending inventory, compare the balance in the inventory ledger with the physical count of 200 pcs at P100 each. If they match, the inventory records are accurate.