Houston Company’s balance sheet includes the amounts shown below. Analysis of the company’s records reveals the following transactions during 2019, the company’s first year of operations: Cash received from customers, recorded as service revenue $217,650

Purchase of supplies for cash, expensed        $ 19,000

Cash paid for salaries, expensed         $ 85,400 At year-end, supplies on hand total $5,300, employees have earned $8,000 but have not yet been paid, and on the last day of the fiscal year, customers paid deposits of $8,700 for future promotions (this is included in total cash received from customers above)   Accounts receivable increased by $33,000. Credit sales for the period were $415,000. What was the amount of cash that was collected from accounts receivable? Wages payable decreased by $12,500. Cash paid for wages in the period was $222,000. What was wage expense for the period? Unearned revenue increased by $13,100. Cash received for unrecorded revenue in the period was $43,700. How much unearned revenue was recorded as revenue during the period? Prepaid insurance increased by $28,400. Cash paid for prepaid insurance policies during the period was $121,000. What was insurance expense for the period?

Required: Determine the ending balance for service revenue, supplies expense and salary expense

A company is evaluating a revenue arrangement to determine proper revenue recognition. The contract is for manufacturing 20 race cars. The customer needs the cars by May 1, 2021. The customer provides a bonus payment of $320,000 if all cars are delivered by the May 1 deadline. The bonus is reduced by a fourth of the total available bonus amount (i.e., reduced by $320,000 divided by 4) each week that the cars are delivered after the deadline until no bonus is paid if the cars are delivered after May 22nd, 2021. The company has good historical data for estimating the probabilities of completion at different dates. It estimates an equal probability (20%) for each full delivery outcome. How much should the company recognize as revenue related to this bonus?

Case study 4

Three companies were dominant in the skincare market in Oman, battling for the "driver's seat". To get the upper hand the companies followed and implemented many strategies to attract customers and grow in the market.

Manar Professional Skincare Company offered 50% more for the same price for their product 'Bright and Glow's. The company also decided to provide 5% offer on every purchase of the product during summer. Manar Professional Skincare Company offered more quantity than before for the same price.

Latafa Organic Company attracted its customers by providing herbal care. Herbal care was deemed to be healthier by giving good results to skincare and fairness. This increased the trust and loyalty of the customers. The company always focused on the need and want of the customers by conducting regular surveys .The Company introduced new herbal facial creams in three different flavours, like Papaya, Mint and Neem. For each 50 gram of Papaya herbal facial cream the company fixed the price as OMR .999 baiza.

Rayan Beauty Company attracted customers by launching a whole new soap product category that results in healthier and fairer skin. They decided to reach the customers by giving the best quality with a high price. This strategy helped because the soaps were considered to be less harmful than fairness creams. The Rayan Beauty Company‟s motive was to always satisfy the customers.

Question 4

i.

ii.

Comment on the various pricing strategies followed by the Manar Professional Skincare

Company & Rayan Beauty Company in the above case.                              (4 Marks–100 /125 words)

Analyse whether Latafa Organic Company can be successful with its pricing strategy.

(3 Marks–75 / 100 words)

iii.   Did Latafa Organic Company and Rayan Beauty Company follow any evolution of marketing

concepts? Justify your answer with the various stages.                                    (3 Marks–75 / 100 words)

Assume that Ali Services company bills its clients for jobs completed during the month. On October 31, 2004, Ali Services company billed its clients $450,000 for products sold during October. During November, Ali Services company collected 20 percent of its sales billed on October 31. the cost price this products was $200,000 which is paid 80 percent in cash. What would be recorded by Ali Services company under the cash basis?

. Evaluate each of the five influ- ence techniques attempted by the

salesperson. Which technique do you think was most effective? Which tech- nique was most important in generating revenue for

2. What could the auto dealer do to reduce the customer’s cognitive dis- sonance relating to the purchase?

3. How could customers like the one at the auto dealer avoid being persuaded by behavioral compliance techniques?

2. What could the auto dealer do to reduce the customer’s cognitive dis- sonance relating to the purchase?

3. How could customers like the one at the auto dealer avoid being persuaded by behavioral compliance techniques?

On September 6, 2006, ABC Company purchased a new boat for $510,000. The estimated life of the boat was 20 years, with an estimated residual value of $50,000. On October 1, 2019, the boat was sold for $78,000. ABC Company used double-declining balance method and applied half-year convention. What was book value of the boat in the beginning of the year of 2007?

1. What is branding for? Give an example to clarify your answer and explain.

   What’s private brand? What’s the purpose(s) of private brand.

2. Explain the primary difference between a wholesaler and sales agent. Who has more active

roles in finding customers and customers’ wants?

3. Let’s say, after 15% increase in selling price, a burger shop found 5% drop in number of sales of burger. Is the demand for burger sensitive to changes in price this case? What do you recommend to keep or increase sales revenue?

When a company lets customers buy on credit, the company attracts more customers. Allowing sales on credit is a part of doing business. However, it is not without risk! The result may be attracting some customers who will never pay the amount they owe to the business. When this money is not paid, the business has an uncollectible account which must be written-off. If a business has too many uncollectible accounts, the business suffers and the end result can spell disaster!

There are two methods of writing off uncollectible accounts:

The Allowance Method (recognized by GAAP)

The Direct Write-off Method (not recognized by GAAP)

There are several different allowance methods:

Percentage of Sales Method – also referred to as the Income Statement Method

Percentage of Accounts Receivables Method – also referred to as the Balance Sheet Method

Aging of Receivables Method

The difference between the Percentage of Sales Method and the Percentage of Accounts Receivables Method is how the allowance for doubtful accounts is treated when using the two methods.

Accounts receivable are amounts due from customers for credit sales. For a company selling on credit, it is important to assess both the quality and liquidity of its accounts receivable. The quality of accounts receivable is how likely you are to collect these accounts without any loss. The speed of collection, or how fast these accounts are paid or converted to cash, relates to the liquidity of collection. The accounts receivable turnover measures both the quality and liquidity of accounts receivable. In other words, it measures how likely collections are going to be and the speed of those collections.

Instructions

Imagine you own a business that sells to customers on trade credit. For example, you manufacture luxury soaps and you sell these soaps to boutique stores in your hometown area.

1. How would you manage the collection of receivables?

2. Even with careful planning, sometimes receivables become uncollectible. Which method would you use to write off an uncollectible account? Explain your reasons.

3. What procedures would you put into place to encourage customers to pay their bills on time?

Please answer all of the questions, if you can not answer all of the questions do not reply.

Case Study: 10 Keys to Small Business Innovation

Creativity expert Teresa Amabile identifies three components of creativity: (1) Expertise. One must have the technical, procedural, and conceptual knowledge to generate potential solutions to a problem. (2) Creative thinking skills. A person must possess the willingness to take risks and to see problems or situations from different perspectives (3) Motivation. One must have an internal desire to develop creative solutions. This motivation often comes from the challenge that the work itself presents. Entrepreneurs and their employees can transform their companies into engines of innovation by combining these three components of creativity with what management consultant The Doblin Group calls the 10 types of innovation.

i. Business model. How does your company make money? These are innovations in the value proposition that a company provides its target customers and in the way it delivers value to its customers.

ii. Networks and alliances. Can you join forces with another company or entity for mutual benefit? A company may forge a synergistic relationship with another organization in which each company’s strengths complement the other.

iii. Organizational structure. How do you support and encourage your employees’ creative efforts? The most effective organizations use an appropriate structure and culture to align their talent to spark innovation.

iv. Core process. How does your company create and add value for customers? These innovations in a company’s internal processes result in superior business systems and work methods that result in benefits for customers.

v. Product or service performance. What are the most important features and functions of your company’s products or services? Innovations in functions and features can give a company’s product or service a significant edge over those of competitors.

vi. Product system. Can you link multiple products into a system or a platform? Bundling products can add value to customers.

vii. Service. How do you provide value-added service beyond your company’s products for customers? Some of the most successful businesses set themselves apart from their competition by providing unparalleled customer service.

viii. Channel. How do you get your products or services into customers’ hands? Some companies provide extra value to their customers by making their products and services available in many venues.

ix. Brand. What is your company’s “identity” in the marketplace? Successful companies use creative advertising, promotion, and marketing techniques to build a desirable brand identity with customers.

x. Customer experience. Does your company engage customers and give them reasons to come back to make future purchases? Innovative companies find ways to connect with their customers, creating a loyal base of “fansumers,” customers who not only purchase but act like fans who promote the company to their friends and family members.

Boatbound

Serial entrepreneur Aaron Hall took note of the “sharing economy” that emerged during the last recession and launched Boatbound, a peer-to-peer boat rental company that brings together boat owners who are willing to rent their boats when they are not in use and people who want a fun boating experience without the cost of owning a boat. Hall realized that 12.2 million boats are registered in the United States, yet the average owner uses his or her boat just 26 days per year. Boatbound screens all potential renters, verifies the condition and the safety of each boat, carries ample insurance on each boat, and covers general liability. Boat owners select their renters from Boatbound’s pool of applicants and set daily rental fees, and Boatbound collects 35 percent of the fee. Boatbound has rented every kind of boat, from kayaks to yachts with captains. Fees range from $200 to $8,500 per day. “As a boat owner and someone in the marine industry, I’ve been waiting for something like this my whole life,” says Aabad Melwani, owner of a marina. “I just didn’t know it.”

Henrybuilt

Scott Hudson, CEO of Henrybuilt, had created a profitable niche designing and building upscale kitchens that ranged from $30,000 to $100,000. In 2006, Hudson opened a New York City showroom, which doubled in size in just 18 months. By 2008, the company had more than 200 jobs in the United States, Mexico, and Canada. When the recession hit, however, new projects came to a standstill, and customers began cancelling orders. In response, Hudson launched a subsidiary, Viola Park Corporation, that provides customers lower-cost remodeling options that use its software rather than an architect to create “custom” variations on Henrybuilt designs. The result is a process that produces a kitchen much faster and at half the cost of a Henrybuilt kitchen. Henrybuilt sales have recovered, but Viola Park accounts for 20 percent of sales and is growing twice as fast as Henrybuilt. Unequal Technologies Robert Vito started Unequal Technologies in 2008 to supply protective clothing and gear, including bullet-proof vests, to military contractors. The protective gear is made from a lightweight yet strong composite material that he developed and patented. Two years later, the equipment manager of the Philadelphia Eagles called to ask whether Unequal Technologies could create a special garment for one of its star players who had suffered a sternum injury. Vito modified the bullet-proof vest for the player and soon had other players in the National Football League asking for protective gear. Unequal technologies went on to develop Concussion Reduction Technology (CRT), peel-and-stick pads for football helmets that are made from before it reaches the skull. Independent tests show that CRT reduces the risk of head injuries from impact by 53 percent. The company now supplies equipment to 27 of the NFL’s 32 teams and has its sights set on an even larger market: amateur sports. Vito says Unequal’s technology gives the company a competitive edge that has allowed it to increase sales from $1 million to $20 million in just one year.

(Source: Scarborough and Cornwall, 2016)

Required:

1. Drawing on the ten types of innovation and how Boatbound and Henrybuilt as small businesses applied the various types of innovation, develop an idea for a small business that will operate based on at least five (5) of the ten types of innovation illustrated in the case.