Major Assumptions of Financial Projections Made

The following financial assumptions shall serve as the basis for projecting future
revenues and expenditures items for more consistent and accurate applications of
different accounts used in the business operation.
Service Revenue
Revenue will be carried on a cash basis. Revenue increases proportionately with
the increase in the annual demand.
Cost of Services
The annual increase of the cost of services will be based on the annual increase
and change of demand and subject to the current inflation rate of 4.1%.
Purchases
On the first year of operation, all purchases will be carried on a cash basis. This
means that there will be no Accounts Payable appearing in the first years Financial
Position of the entity.
Store and Office Supplies Inventory
All supplies for the first year will be purchased before the commencement of the
operation of the business. Beginning inventory of the next year shall be 10% of the total
inventory available for use this year. Purchases for the next years operation shall be
15% more than the purchases of the prior years.
Labor and Management
The labor force of Midas Touch will be composed of 2 cashiers/receptionists, 8
checkers, 2 yoga instructors and 10 masseurs and massueses.
Salaries Expenses, SSS, PhilHealth and PAG-IBIG Contribution
Proper time keeping shall be observed in accounting labor cost. This is
concerned with the determination of the total number of hours worked by an employee
and how these hours are properly accounted for. The total number of hours are used as
basis in payroll preparation. Daily time records are also used to show the number of
hours an employee works. Employees will be receiving their salary every 15
th
and 30
th
.
Deductions of gross pay are income tax withheld, SSS, PhilHealth and PAG-IBIG
Contributions. Special and regular holidays, including worked rest days have different
labor rates.
Rent Expense
The annual rent expense of the entity is Php. 120,000.00 per month.
Advertising Expense
For the Midas Touch to be known to the public, radio advertisements and flyers
will be proliferated. Within the early months of its operation, there will be radio
advertisement at a cost of Php. 66,000.00 for 30 seconds, good for a month. Print
advertisement will be in the form of flyers and newspaper. The cost of a flyer is 50
centavos with a total cost of Php500 for 1000 copies. The flyers will be floated a week
before the grand opening of Midas Touch at strategic places in Baguio City. A portion of
the Baguio Midland Courier will be rented for a month with a cost of Php. 2,500.00. The
advertisement expense will be increased by 4.1% based on the current inflation rate.

Depreciation Expenses
Furniture & Fixtures, store equipment, office equipment and leasehold
improvements will be depreciated using the straight-line method based on their useful
lives without salvage value.
Utilities Expense
Bills will increase by 4.1% based on the current annual inflation rate. On the
other hand, communication expenses, telephone bills will be subject to a fixed rate.
Cash on Hand
The entity will maintain a petty cash fund balance of Php. 10,000.00 and change
fund of Php. 5,000.00. All cash collections in a day are to be deposited in the bank of
the partners choice. Any undeposited cash shall be kept in the vault secured by code
only known to the finance officer.
Miscellaneous Expenses
Expenses with immaterial amounts will be debited to this account.
Taxes and License Expenses
All taxes required in establishing the business shall be paid in the local and
national government. Licenses, which include sanitary permits, inspection and other
necessary permits, are to be filed and secured to obtain a mayors permit essential in a
business.
Partner Capital and Withdrawal
The entity has five capitalist partners contributing Php. 2,000,000.00 each before
the establishment of the business. Division of partnership profits and losses are stated
in the Articles of Partnership included herein.
Each partner is only allowed to withdraw an amount not exceeding the balance of
their income account.
Commencement of the Business
Midas Touch Wellness Center will begin its operation on January 1, 2015. The
accounting period of the business will start every January 1.