2. Business and commerce are activities much older than the microchip (or the phone for that matter). In a similar vein as the previous question, imagine companies in the 1600s through the 1800s and how information was managed in these instances. The East India Company and the Hudson’s Bay Company (which still exists today) were some of the biggest companies of their day. Imagine how simple business tasks such as logistics and employee transfer (from one country to another) might have been accomplished. What might this tell us about how companies use IT today? What lessons can we draw from this knowledge?

Debate has emerged and raged on regarding many African countries including Ghana not making rapid economic progress in an emerging knowledge economy. Poverty exists in spite of development being driven by technology, fuelled by information and powered by knowledge, and, many are oblivious to the reality that information and communication technology (ICT) cuts across all aspects of our lives.
We take a queue from the ICT driven economic experiences of the United States during the dot com boom and developments in Finland and other Western economies. We are informed by issues of globalization, the knowledge economy and the transformation of business processes using ICT in India, China, Korea and Malaysia. Close to us in Africa we are encouraged by economic growth using ICT in Rwanda and South Africa.
Pundits have argued that illiteracy is to be blamed, and mathematics and science education needs to be prioritized. Others say it is in our attitude fashioned by our past which does not relate development as an independent variable relative to other variables such as technology. While some view our challenges as lack of leadership to implement sustainable ICT policies and strategies at a macro and micro level, many argue that development of a nation’s economy has much to do with input from ICT personnel. They do not only belong to the domain of personnel with tacit knowledge of engineers who should provide infrastructure but such need to study policies that determine development
a.
i. As a person in charge of IT in a government department in Ghana, what indicators will you use to convince your colleagues that there was a need to take steps to usher this country quickly into a knowledge economy?
ii. What software option will you recommend to your ministry? Open source or Microsoft as proprietary software? Provide reasons for your recommendation.
iii. List FIVE (5) ways of how the TPS can be of use to a government department.
b.
i. What challenges are government organizations likely to face in deploying ICT to change their operations?
ii. Which communication medium would you recommend for a government department, a cable, wireless or something else? Justify your recommendation

Q.

The inventory of Ahrsun Ventures Corporation was destroyed by fire on February 29, 2020. The following data is for the first two months of the year: Sales $51,000, Sales Returns and Allowances $1,000, Purchases $28,200; Freight-In $1,200; and Purchase Discounts $1,400. According to the financial statements at year-end December 31, 2019 the balance of Merchandise Inventory was $20,000. Ahrsun Ventures has a gross profit rate of 30% on net sales and uses the periodic method of inventory.

REQUIRED: Determine the merchandise lost by fire.

Q.

On March 31 2020 the adjusted year-end account balances of ABC Company were as follows:

Required: Prepare, in good form, a classified Balance Sheet. ABC Company uses the perpetual inventory method.

Q.

The March 31, 2019 balance sheet of Kalakaua Corporation had Accounts Receivable of $525,000 and a credit balance in Allowance for Doubtful Accounts of $33,000. During the year ended March 31, 2020, the following transactions occurred: sales on account $1,550,000; sales returns & allowances, $120,000; collections from customers, $1,350,000; accounts written off $41,000; previously written off accounts of $5,000 were collected.

1. Using the above information, what is the balance of Accounts Receivable at March 31, 2020?

2. Suppose that it is the company policy to use the percentage of sales basis to estimate bad debts expense and anticipates 3% of net sales to be uncollectible, what is the adjusting entry at March 31, 2020? (Show calculations.)

3. Ignore the entry made in b) above.

Assume that it is company policy to use the aging of receivables basis to estimate bad debt expense. It determines that uncollectible accounts are expected to be $38,400.   What is the adjusting entry at March 31, 2020?   Assume the March 31, 2020 balance of Accounts Receivable is $575,000 and Allowance for Doubtful Accounts has an existing balance of $3,000 (cr). (Show calculations)

Q. The following figures are provided for Hanauma Marketing Corp. What is gross margin?

Sales revenue                                           $480,000

Cost of goods sold                                      300,000

Sales discounts                                           20,000

Sales returns and allowances                    15,000

Operating expenses                                     85,000

Interest revenue                                             5,000

a) $105,000

b) $140,000

c) $145,000

d) $ 90,000

e) $180,000

Case 5.0: Incentives in the Firm – Compensating the CEO

Let’s work through an incentive concept and problem. “Moral hazard” problems arise when someone – the “principal” – hires an agent to do something, but the agent has an incentive to do something else. For example, firm owners may want their management team to maximize profits, but maximizing profits is hard, time-consuming work that could interfere with the management team’s preference for playing golf. If top management simply receives a salary, the problem is aggravated because the managers may not be motivated to satisfy the owners, and the owners can’t easily monitor management activity to know if they’re really doing a good job. The problem is resolved in large part if the owners tie most or all of management compensation to firm profits, as income is often a pretty good motivator (although some golf nuts will still pause for a while over this one.) We can set up a scenario to explore this incentive issue further, and this problem will also help fix in our minds the difference between maximizing revenue and maximizing profit.

A small firm faces an inverse demand function of P = 100 - Q. Its total cost function is given by TC = .5Q².   (You should see right away that marginal revenue is thus MR = 100 – 2Q, and it also happens that marginal cost is just MC = Q. Both MR and MC are the first derivatives of total revenue and total cost. And a quick comment on MC: unlike some marginal cost functions we’ve seen, this one is not constant, because marginal cost is getting $1 higher with each additional unit of output.)

The Chief Executive Officer will manage the firm, choosing output and price. Currently, the CEO is negotiating an incentive-based contract with the shareholders of the company. The CEO has proposed that she get 20% of the total revenue brought in by the firm. The shareholders' representative has counter-offered that 10% of total revenue be given to the CEO. (Hint: basing compensation on revenue will motivate revenue maximization rather than profit maximization!)

1.    How much income will each plan generate for the CEO and for the shareholders, respectively? (Hint: since both plans create incentives for the CEO to maximize revenue rather than profit, you should not set MR = MC at this point. BIG hint: revenue is maximized when selling an additional unit won’t increase your revenue, or in math terms, when MR = 0.)

CEO’s proposal: she keeps 20% of TR.

Owners’ proposal: CEO keeps 10% of TR.

2.    Suppose you are asked to mediate in the negotiations. Can you propose an incentive-based compensation scheme for the CEO that both parties are likely to accept, assuming everyone would like to maximize their income?

Your proposal:

Demonstration that everyone is better off than under their own proposal and thus should accept your proposal:

3.    Now thinking even more shrewdly: what’s the maximum price you could charge for your consulting services and still leave everyone better off?

Ayayai Corporation had the following stockholders’ equity accounts on January 1, 2020: Common Stock ($5 par) $500,000, Paid-in Capital in Excess of Par—Common Stock $200,000, and Retained Earnings $120,000. In 2020, the company had the following treasury stock transactions.

Ayayai Corporation uses the cost method of accounting for treasury stock. In 2020, the company reported net income of $30,000.

Prepare the stockholders’ equity section for Ayayai Corporation at December 31, 2020. (Enter the account name only and do not provide the descriptive information provided in the question.)

Please let us know if Facebook has any long-term debt on its balance sheet. Please give us some information about that long-term debt. You will have to look in the notes to the financial statements for this information. Also please calculate the times interest earned ratio for this corporation and let us know what this ratio indicates about its financial condition.

Part 2

What are unsecured notes? Why would they carry a relatively high interest rate? What are convertible securities? Why are they good for the investor and for the company? Why would they carry a relatively low interest rate? What does callable mean? What advantage does this feature give a company?

Responses to Instructor

Please check your thread for questions or comments from me and be sure to provide a comprehensive response, as requested.

Responses to Classmates

Please select one of the following bond issues and provide the journal entry when responding to your classmates this week:

1. Jan 1. ABC Corp issued $1,000,000 in bonds for a $75,000 discount.

2. Jan 1. ABC Corp issued $1,000,000 in bonds for a $50,000 premium.

A hurricane destroys Kirk’s boat in 2017. The boat is worth $40,000, and Kirk paid $30,000 for the boat two years ago. The boat is a personal use asset. Kirk’s AGI for 2020 is 40,000. Answer the following unrelated situations:

a. What is the casualty deduction that Kirk can take in 2017?

b. Assume that the boat was destroyed in 2020. What is the casualty deduction Kirk can take in 2020?

c. Assume that the insurance company pays Kirk $35,000 in 2017 to cover the loss of the boat. What is the casualty deduction Kirk can take in 2020?

Stark Engineering Solutions Melbourneknew it had a problem with recruitment when it began to lose track of its job applicants’ Curriculum Vitae’s (CV’s or resume). It frequently called the same candidates for an interview twice and from time to time, sought to interview people it had already employed. HR staff would spend up to two hours looking for an individual CV’s for a given job.

The company had existed for around 4 years and had grown very rapidly. It had around 2000 employees but planned to expand this to 6000 over the next three years. The business, with 4 offices in major Australian cities, intended to take on approximately some extra 200 employees each quarter.

The Human Resources recruitment team had started with 2 members and had grown to 12 people across the four offices. The bigger it grew, the greater the chaos and confusion. The recruitment database was maintained in an MS Excel spreadsheet and was not coordinated between the 4 offices. They were receiving an average of1000 CV’s per month – via email or in the form of the hard copy sent by candidates or by recruitment firms – for an average of around 60 vacancies across all 4 offices at any given time.

An internal review demonstrated that the company had to standardise its recruitment processes and reduce duplication. The cost per hire needed to be cut and the overall quality of the talent hired by the business needed to rise.

The company felt that these improvements would help speed response times and promote a positive image. They could also help to improve the efficiency of the recruitment staff. Stark Engineering believed that the adoption of an online recruitment platform would improve the shortlisting process and boost candidate confidentiality. It could, in time, ensure a greater diversity of job applicants.

Source: Adapted from Instructor Resources-Nankervis, A., Compton, R., Baird, M. & Coffey, J. 2017. Human Resource Management, Strategy and Practice. (9th Ed.) Australia: Cengage Learning

Questions:

1. Explain the current problems facing the Stark Engineering recruitment team and how the benefits of using an online recruitment system could solve these issues for both the employer and the prospective candidates applying for the jobs.

this question is related to human resource management

Sako Company’s Audio Division produces a speaker that is used by manufacturers of various audio products. Sales and cost data on the speaker follow:

Sako Company has a Hi-Fi Division that could use this speaker in one of its products. The Hi-Fi Division will need 9,000 speakers per year. It has received a quote of $29 per speaker from another manufacturer. Sako Company evaluates division managers on the basis of divisional profits.

Required:

1. Assume that the Audio Division is now selling only 55,000 speakers per year to outside customers.

a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division?

b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division?

Transfer price=

c. If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 9,000 speakers from the Audio Division to the Hi-Fi Division?

d. From the standpoint of the entire company, should the transfer take place?

2. Assume that the Audio Division is selling all of the speakers it can produce to outside customers.

a. From the standpoint of the Audio Division, what is the lowest acceptable transfer price for speakers sold to the Hi-Fi Division?

b. From the standpoint of the Hi-Fi Division, what is the highest acceptable transfer price for speakers acquired from the Audio Division?

Transfer price=

c. If left free to negotiate without interference, would you expect the division managers to voluntarily agree to the transfer of 9,000 speakers from the Audio Division to the Hi-Fi Division?

d. From the standpoint of the entire company, should the transfer take place?