Question 1

2016. Journalize the following transactions and post them to ledger.From the following                    transactions of Phoenix Inc for Oct ,2016.

(i)Journalize the below transactions
(ii)Post the Journal entries in to ledger accounts

Date	Transactions
2016 Oct 1	Niel started business with cash $ 800,000
Oct 2	purchased goods worth $ 3000
Oct 15	Sold goods for  $ 25000
Oct 18	Purchased stationeries $4000
Oct 23	Purchased furniture for $ 24,000
Oct 25	Paid electricity charges with cash $3000
Oct 26	Paid Salary $18000
Oct 28	Paid rent $500

 
(10 Marks)

1. “Bookkeeping is synonymous to accounting”Analyse this statement.

(10 marks)
Question 2

2016. Prepare income statement and balance sheet of Indus Corp as on 31^st Dec,2016.

Particulars	Amount ($ ‘000)
Sales	37,436
Cash	4,895
Cost of goods sold	26,980
Accounts Payable	7,156
Accounts Receivable	5,714
Selling, general, and administrative expense	3,624
Inventories	8,517
Research and Development expense	1,982
Plant and Equipment	7,154
Interest expense	450
Long term liability	20105
Land	981
Income tax expense	1,100

(10 Marks)

1. Why are financial statements are so important for a business ?

(10 Marks)
Question 3

1. ABC Industries is in the Business of manufacturing agro equipment.            Prepare the cash budget for the quarter April to June, based upon the following data and additional information.

Month	Sales	Purchases	Wages	Selling Overheads	Office Overheads	Mfg. Overheads
	$	$	$	$	$	$
January	60,000	36,000	9,000	4,000	2,000	4,000
February	62,000	38,000	8,000	5,000	1,500	3,000
March	64,000	33,000	10,000	4,500	2,500	4,500
April	58,000	35,000	8,500	3,500	2,000	3,500
May	56,000	39,000	9,000	4,500	1,000	4,000
June	60,000	34,000	8,000	4,500	1,500	3,000

Additional Information :

800000. The Cash balance at 1 April is $ 800000.
800001. Sales: 40% cash sales and 60% is collected in the month following sales.
800002. Purchases are all on credit and are paid after 2 months.
800003. A plot of land was purchased in December (Previous year) and $ 87,000 is payable in April.
800004. Wages are paid two month in arrear and all overheads are settled after a month  they are incurred.
800005. ABC Industries is due to repay a loan of $ 16,000 in May.
800006. A dividend of $ 80,000 is expected to be received in May.

(10 Marks)

1. “With zero-based budgeting,each expenditure item must be justified for the new budget period.” Explain.

(10 Marks
Question 4
A.(i)  Moment Inc. provides the following data for June 2016 when 15,000 Units are manufactured:
Standard Material Cost (Per Unit)
8.50 kg @ $ 7.50/kg
Actual Material Cost (Per Unit)
6.75 kg @ $ 13.5/kg
StandardLabor cost (Per Unit)
5.5 hrs @ $ 15/hr
Actual Labor cost (Per Unit)
6.5 hrs @ $ 12.2/hr
Calculate:
Direct Material Price Variance
Direct Material Quantity/Usage Variance
Total Material Cost Variance
Direct Labor Rate Variance
Direct Labor Efficiency Variance
Total Labor Cost Variance
(ii) Calculate Variable Overhead Spending Variance if actual labor hours used are 260,standard variable overhead rate is $10.40 per direct labor hour and actual variable overhead rate is $9.30 per direct labor hour. Also specify whether the variance is favorable or unfavorable.
(iii)  Calculate the variable overhead efficiency variance using the following figures:

Number of Units Produced	620
Standard Direct Labor Hours Per Unit	0.2
Actual Direct Labor Hours Used	260
Standard Variable Overhead Rate	$10.40

1. “Managers of most organizations continually plan for the future, and after the plan is implemented, managers assess whether they achieved their goals. What are the two functions that enable management to go through the process of continually planning and evaluating?

(20 Marks)
Question 5

1. Robest Industries produces only one product. The following revenues and cost have   been estimated for the forthcoming month:

Selling price, $ 250 per unit (SP)
Variable cost, $ 100 per unit (VC)
Fixed Cost, $ 56000
The managers of the firm wish to know the following:

1. Calculate contribution margin per unit
2. Calculate contribution margin ratio.
3. BEP in units
4. Calculate BEP in sales.
5. “Good Managers must not only be able to understand the conceptual underpinnings of cost behaviour,but they must also be able to apply those concepts to real world data           that do not always behave in the expected manner.”Explain cost behaviour analysis.

(20 marks)
Question 6

1. Sandersen, Inc., sells minicomputers. The firm’s taxable income is $1,225,000. Calculate the corporation’s tax liability.

	Corporate Tax Rates
15% $ 0–$50,000 25% $ 50,001–$75,000 34% $75,001–$10,000,000 35% over $10,000,000 Additional surtax: •5% on income between $100,000 and $335,000. •3% on income between $15,000,000 and $18,333,333.

 

1. “Originally, the sole objective of the federal government in taxing income was to generate financing for government expenditures. Although this purpose continues to be important, social and economic objectives have been added.” Substantiate the statement with enough explanations.

Question 7                                                                                                    

1. Friedman Manufacturing, Inc. has prepared the following information regarding two investments under consideration. Which investment is better, based on risk (as measured by the standard deviation) and return?

Common Stock A		Common Stock B
Probability	Return	Probability	Return
.20	12%	.10	4%
.50	18%	.30	6%
.30	27%	.40	10%
		.20	15%

 

1. “ More can be said about risk, especially as to its nature, when we own more than one asset in our investment portfolio.” Define risk and explain how risk is affected if we diversify our investment by holding a variety of securities?

Question 8                                                                                           

1. J and S Corporation is evaluating its financing requirements for the coming year. The firm has only been in business for 1 year, but its CFO predicts that the firm’s operating expenses, current assets, net fixed assets, and current liabilities will remain at their current proportion of sales.Last year J and S Corp. had $15 million in sales with net income of $1.5 million. The firm anticipates that next year’s sales will reach $18 million with net income rising to $3 million. Given its present high rate of growth, the firm retains all its earnings to help defray the cost of new investments.The firm’s balance sheet for the year just ended is found below:

		J and S Corporation
Balance Sheet 12/31/2000 % of Sales Current assets $6,000,000 40% Net fixed assets 9,000,000 60%    Total $15,000,000 Liabilities and Owners’ Equity Accounts payable $3,750,000 25% Long-term debt 4,250,000 NAa    Total liabilities $8,000,000 Common stock 2,000,000 NA Paid-in capital 2,800,000 NA Retained earnings 2,200,000 Common equity 7,000,000    Total $15,000,000
aNot applicable. This figure does not vary directly with sales and is assumed to remain constant for purposes of making next year’s forecast of financing requirements.

Estimate J and S corp. total financing requirements (i.e., total assets) for 2001 and its net funding requirements (DFN).

1. Give a brief summary of forecasting to determine additional (discretionary) funding (financing) needed.

Question 9
The balance sheet and income statement for the McDonald’s are as follows.

		McDonald’s Corporation 2016 Income Statement ($ Millions)
Sales $11,508 Cost of goods sold   6,537 Gross profits $ 4,971 Marketing expenses and general     and administrative expenses $ 1,832 Depreciation expense    345 Total operating expenses $ 2,177 Operating profits $ 2,794 Interest expenses      387 Earnings before taxes $ 2,407 Income taxes      765 Net income before preferred stock dividends $ 1,642 Preferred stock dividends        25 Net income available to common stockholders $ 1,617

 

		McDonald’s Corporation December 31, 2016 Balance Sheet ($ Millions) Assets
Cash $ 341 Accounts receivables 484 Inventories 71 Prepaid expenses      247    Total current assets $ 1,143 Gross fixed assets $20,088 Accumulated depreciation    5,127    Net fixed assets $14,961 Investments 702 Other assets    1,436    Total assets $18,242 Liabilities and Equity Liabilities (debt):    Short-term notes payable $ 1,629    Accounts payable 651    Taxes payable 53    Accrued expenses      652        Total current liabilities $ 2,985    Long-term debt   6,325        Total liabilities $ 9,310 Equity:    Preferred stock $ 80    Common stock:    Par value and paid in capital $ 708    Retained earnings 11,927    Treasury stock (3,783)    Total common equity $ 8,852        Total equity $ 8,932        Total liabilities (debt) and equity $18,242

 

1. Calculate the following ratios:

 

RATIO	INDUSTRY NORM
Current ratio	0.70
Inventory turnover	90
Average collection period	6.5 days
Debt ratio	50%
Total asset turnover	1.5
Fixed asset turnover	2
Operating profit margin	21%
Return on common equity	15%

 

1. Calculate the future sum of $5,000 given that it will be held in the bank 5 years at an annual interest rate of 6 percent.
2. Knutson Products, Inc., is involved in the production of airplane parts and has the following inventory, carrying, and storage costs:

1. • Orders must be placed in round lots of 250,000 units.
   • The carrying cost for 1 unit of inventory is $ 10
   • The ordering cost is $100 per order.
2. Determine the optimal EOQ level.
3. Determine the average inventory when the safety stock is 2000 units.

Question 10
“Some of the financial techniques and strategies are necessary for the efficient operation of an international business. Problems inherent to these firms include multiple currencies, differing legal and political environments, differing economic and capital markets, and internal control problems. The difficulties arising from multiple currencies are stressed here, including the dimensions of foreign exchange risk and strategies for reducing this risk.” Elucidate.
Question 11
Explain the financial Axioms

1. Risk – return trade-off
2. Time value of money
3. Cash is king
4. Incremental cash flows
5. The agency problem
6. Taxes bias business decisions
7. All risk is not equal
8. Ethical dilemmas are everywhere in finance
9. The Curse of Competitive Markets
10. Efficient Capital Markets

 

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ASSESSMENT TASK:
In the current global economic climate, International HRM is facing unprecedented pressure to become more innovative, effective and efficient. In this respect the significance of International Human Resource Management cannot be overestimated in relation to the success of a global business entity.
With this in mind selected (Tesco and Amazon) two different organisations that operate internationally.  These organisations operates in different sectors and different geographic locations. Critically evaluate the challenges now facing these organisations from an International HRM perspective.
The essay should focus on theory/models/frameworks related to IHRM in the context of a rapidly changing global context.
Please note that academic underpinning is required. As such to support my discussion is imperative that a comprehensive literature review is conducted (minimum of five citations required).

 

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