Merchandising Business

Merchandising Business

Prevention Diabetic Footwear

Betty Thompson

Colorado Technical University

Accounting II

Professor Dinah Carr

May 2, 2011

Prevention Diabetic Footwear

Introduction

My phase 4 IP project is to design a merchandising type of business. My business is a corporation with a merchandising operation designed and name of my business is called Preventive Diabetic Footwear. It is a business that is needed for individuals that are a diabetic or have families with this illness. The purpose of my business is the help ease the foot pain associated with symptoms of diabetes. Some of the products that will be available for customers to buy are insoles for shoes, proper diabetic shoes, diabetic cream, lotion, and diabetic socks. I will try to get any other items that the customers might needs for their feet care as the business grows in the near future.

There will a chart of accounts and several transactions for the first month of operations for month of April, 2011. As the business grows, there will be more accounts added to the accounting principles for this company. A merchandising business is primarily dealing with the buying and selling of finished goods. There will be four paid employees working for my company initially, but as the business grows more staff might have to be hired so the company can be prosperous ones in the future. I will have one accounting clerk staff full-time, and three hourly shoes clerk for the store help. The accounting clerk sole responsibility will be to take care of all the accounting duties, such as, preparing payroll, bank deposit, and all financial reports as they are needed. The other three store staff clerks for the store will just be handling the customers, stocking the shelves, help with yearly inventory, and making sure that the store is well stocked for all the customers' needs daily. These clerks can ring-up all the cash and credit cards sales. They all will be properly trained before handling any money transactions at my store.

Discussion

Capital Structure

The initial set-up of my merchandising business will be designed with an issuance of debt capital structure. A debt capital structure design has many advantages and disadvantages will be discussed in this paper. Some of the advantages are that debt does not dilute the owner's ownership interest in the business, interest on the debt can be deducted on the company's tax return, lowering the actual cost of the loan to the business, and raising debt capital is less complicated and is safer than equity capital structure. The disadvantages for this type of structure are debt have to be paid at a given time, must have a higher level of cash flow, and a business might be limited as to the amount of debt that it can carry (Debt vs. equity, 2009). Debt is referred to what is owned to someone on money borrowed. Debt capital can be for a loan note, bond, mortgage, and others such available cash from a bank or investors for a merchandise business. "Debt is accounted for the liability of the company and interest payments are deductible business expenses" (Debt, 2009).

Salary for Employees'

The accounting clerk will be paid on a monthly basis at $15.00 per hour for a 40 hour week with no overtime. There will be three other full-time employees employed by my company with a salary of $9.50 per hour. They will work for a 40-hour week pay schedule, only allowed to work overtime during the busy holiday's period. If they do work overtime, then they will be paid time and half plus their regular pay for any hours over 40 hours a week. They will have deductions taken out of their check each month from gross salary, such as, insurance, FICA tax, state, and federal taxes. Each employees' working for the company will be reviewed for a raise at six-month and 1-year time intervals, in which, will be determined by hob performance, attendance, and behavior with our company at these reviews. There might receive a yearly bonus if we meet our budgets each year on time.

Depreciation Method

For this IP project, there must be three tangible assets for the merchandising business