MARKETING PLAN Essay

BUSA 203 Principles of Accounting
Kezard Enterprises Inc.
Background
Heather and Matthew Kezard moved from Winnipeg, Manitoba to Duncan, British
Columbia in the summer of 2011. Prior to their move, the Kezards had developed a baking tool that they believe will be popular with households across North America. This tool is inexpensive to manufacture and the prototype has already received excellent reviews in several publications.
The Kezards have made arrangements with Cai Manufacturing Ltd. (CML) to manufacture their product. Heather and Matthew will handle the marketing of the product, as well as the sales and distribution to retailers. With the help of their lawyer, they incorporated a new company, Kezard Enterprises Inc. (KEI) on January 2, 2012.
Heather and Matthew decided that the company’s first year-end would be December 31,
2012.

Financing
Details of the incorporation were as follows:
Authorised Capital

Issued Capital: Common shares

An unlimited number of common shares of no par value
1,000,000 preferred shares having a stated value of $10.00 each
Matthew: fifty shares
Heather: fifty shares
The new common shares were issued for
$0.25 each

On January 2, 2012, Heather opened a bank account for KEI. During the first week of
January, the following transactions were processed through the bank account:
January 2
January 3

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$25.00 received, being the purchase consideration for the new shares
$150,000 received, representing a noninterest bearing loan from Heather to KEI

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Business Arrangements
At the beginning of January, the Kezards signed a five-year lease on an office with a monthly rent of $3,000; payments on the lease are due on the first day of each month
(starting January 2012). Upon signing the lease, KEI had to pay rent for both the first and last months.
The following payments were processed through the bank account in January:
Item
Purchase of two tower computers
(including two flat screens and two printers) Purchase of two notebook computers
Purchase of office equipment and furniture
Payment of annual premium on business insurance effective February 1, 2012
Payment of first and last months’ rent

Cost
$6,000

5,500
10,000
1,800
6,000

KEI negotiated an agreement with CML to manufacture the first 20,000 units of the product for a total price of $200,000, which includes shipping costs. The contract with
CML was intended to cover the period February 1 to December 31, 2012. KEI has agreed to pay for all shipments COD. If the units purchased exceeds 20,000 units in 2012, then
KEI will be entitled to a 6 percent rebate of total purchases made during the year. It is expected that any rebate due to KEI will be received on January 31, 2013.

Operations
CML manufactured and delivered 22,000 units to KEI in the February to December period of 2012. KEI shipped 21,000 units to customers during the same period.
Sales for the February to December period were as follows:
Cash Sales
Credit Sales
Total Sales

$328,000
120,000
$448,000

As at December 31, 2012, a total of $15,000 was unpaid and outstanding with respect to credit sales.
At the beginning of June 2012, Heather hired an assistant to help run the KEI office, at a monthly salary of $3,500; salary payments were made at the end of each month.

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The following payments were made to cover expenses during the February to December period: Telephone and ISP
Shipping (to customers)
Travel
Utilities
Office Supplies
Marketing
Membership fees (covers March 1, 2012 to February 28, 2013)

$7,800
21,000
36,200
10,600
17,500
39,500
1,200

Accounting
Heather and Matthew have arranged for a review engagement to be carried out by the CA firm, Chavan and Co, for the 2012

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