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Case Study: Itaewon Class Company (ICC) sells collectible items such as dolls, jewelry, drink coasters and table linens. The company, which has five full- time employees, obtains its merchandise from independent contractors throughout the United States; they then mark up the products and sell them at craft stores and other outlets. Two of the five employees interact with the independent contractors, arranging inventory purchases based on demand for ICC's products and their own personal preferences. Those same employees use their personal vehicles to transport the inventory from ICC's main office to the retail locations where they will be sold. A third employee serves as the company's receptionist, while the fourth manages all aspects of the accounting information system. The company president is the fifth employee and oversees administrative affairs such as hiring, performance evaluation and publicity.
ICC purchases its entire inventory on account from the independent contractors, some of whom offer cash discount terms for early payment. All ICC's sales are for cash; each inventory item is marked up 25% on its cost to determine the selling price. For example, if a product costs P10,000 to buy, ICC sells it for P12,500. The two sales employees bring all cash receipts back to ICC's main office; the receptionist deposits the cash in the bank at least once a week.
Requirement:
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