Cycle Wholesaling sells merchandise on credit terms of 2/10, n/30. A sale for $1,050 (cost of goods sold of $625) was made to Sarah’s Cycles on February 1. Assume Cycle Wholesaling uses a perpetual inventory system. Required: 1. to 3. Record the entry for sales, cost of goods sold and cash collected on February 9 and March 2. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1. Give the journal entry Cycle Wholesaling would make to record the sale to Sarah's Cycles.
2. Give the journal entry to record the collection of the account, assuming it was collected in full on Feb 9, 2010.
3. Give the journal entry, assuming, instead, that the account was collected in full on march 2, 2010.
4. Calculate the gross profit percentage for the sale to Sarah's Cycles, assuming the account was collected in full on Feb 9, 2010.

Apple reported the following pre tax income (loss) during 2010-2017

There are no temporary or permanent differences between taxable income and EBIT for ALL years

Assume Apple will elect to carryback losses to the extent possible

Also assume that at 12/31/15 Apple is reasonably confident that they will have $30,000 of taxable income in 2016

Required:

A) prepare journal entries for 2010-2017 for income tax expenses/benefit.

B) Draft the lower portion of the 2015 income statement starting with EBIT

C) Draft the lower portion of 2016 Income statement starting with EBIT

Identify and discuss the steps in the recording process. Be sure to discuss what each step does and how it relates to the steps before and after it. Then, answer the following questions:

Should business transactions credits and debits be recorded directly into the ledger accounts?

What are the advantages of recording in the journal before posting transactions into the ledger?

On February 5, the directors declare a 18% stock dividend distributable on February 28 to the February 15 stockholders of record. The stock’s market value is $41 per share on February 5 before the stock dividend. The stock’s market value is $35 per share on February 28.

2. One stockholder owned 850 shares on February 5 before the dividend. Compute the book value per share and total book value of this stockholder’s shares immediately before and after the stock dividend of February 5. (Round your "Book value per share" answers to 3 decimal places.)

Taxi Dancing around the Question of Regulation

Uber is a ridesharing service introduced in San Francisco in 2009 and quickly expanded to 140 U.S. cities and 40 foreign countries. Customers “e-hail” a ride through an app on their smartphone and a ride is there within minutes. The service is cheaper than a typical taxi and there is no cash involved as the charges come straight from the customer’s credit card. The service has its detractors, including cab services and some dissatisfied customers.

Management Update: Add drivers to the list of possible Uber detractors. In September 2015, a California judge granted class-action status to an employee status lawsuit filed against the company. The suit is open to all Uber drivers in California. The lawsuit claims Uber misclassified its employees as contract workers. It alleges Uber treats drivers like employees without providing the requisite benefits. Uber plans to appeal the decision saying there really is no “typical” driver, the key question at issue. If the suit is successful, it could mean the end of Uber

“Innovation and regulation simply don’t work together.” So says Larry Downes, the victim of the cab ride described at the outset of the case and formerly of the Northwestern University School of Law and the University of California-Berkeley’s Haas School of Business. Assuming that he’s right, why is this so? Why is regulation often incompatible with innovation? Why do we regulate most industries in the first place? In your opinion, what sort of tradeoffs should we seek when we try to balance the opposing advantages of regulation and innovation?

Limpah Kurnia Sdn Bhd (LKSB) is an engineering company that started a new business with an opening cash balance of RM85,000. This new business will focus on sales component parts to all potential customers located in Sungkai, Perak. The following are the budgeted data of LKSB for the year 2020.

1.   In January 2020, to start a business the company has rented a double storey building for its operation at RM5,000 per month with RM20,000 rental deposit. Rental deposit is paid in January and monthly rental will be paid in the month it is incurred.

2.   In February, the company is planning to purchase a machine at a cost of RM55,000 which has an estimated useful life of 10 years. Depreciation charge per annum will be RM5,500. Only half of the machine cost will be paid in the month of purchase, while the balance will be paid equally over the next two months.

3.   Four (4) administration staff will be employed and each staff will be paid RM1,200 per month. Payment will be in the month in which they are incurred.

4.   Purchases of materials will be made on credit. 50% of the credit purchases will be paid in the month of purchase and another 50% one month after the purchases. Estimated purchases are as follows.
           January   RM23,000
           February   RM28,000
           March       RM25,000
           April       RM22,000

5.   A motor van costing RM49,800 will be purchased in January. Payment of the motor van will be in six equal payments starting February 2020.

6.   Estimated sales for component parts in units are:
           January    5,000
February    4,500
March        5,300
April       4,800
  
7.   The selling price for the component parts is RM20. 60% of the sales are expected to be in cash whilst the other 40% is on credit. The credit sales will be collected one (1) month after sales.
8.   Allowance for manager is RM1,000 per month and paid in the month incurred.
9.   Monthly utilities RM850 is to be paid one month in arrears.
10.   The company received 5% dividend from unit trust investment of RM500,000 in February.

Required:
a)   Prepare schedule of collection and payments for the month of January, February and March 2020.

b)   Prepare a cash budget for the month of January, February and March 2020.

(Total: 25 Marks)

(All are stated in million dollars)

Suppose the expected growth of net sales for 2021 is 8%, calculate the Quantum Inc. Additional Fund Needed (AFN) for 2021 based on the 2020 status quo. Also, please carefully explain the meaning of the projected 2021 AFN that you calculated.

Use this table to answer this question (All are stated in million dollars)

Suppose the expected growth of net sales for 2021 is 8%, calculate the Quantum Inc. Additional Fund Needed (AFN) for 2021 based on the 2020 status quo. Also, please carefully explain the meaning of the projected 2021 AFN that you calculated.

Churros Ltd received its bank statement for the month of January 2020 showing a credit balance of $4,188.30 as at 31 January 2020. The cash balance on the company’s books at 1 January 2020 was $176.00 (debit). The progressive totals of the Cash Receipts Journal and the Cash Payments Journal before considering items 1 to 5 below were $21,475.40 and $17,622.10 respectively. The following reconciling items were identified: (1) Un-presented cheques amounted to $501.25. (2) Debits included in the bank statements were: (a) A $225.00 cheque received from a customer and deposited by Churros Ltd was returned and marked “Insufficient Funds”. (b) Service fee for the month was $11.75. (c) Cheque book charge $12.00. (3) A credit in the bank statement indicated that a note receivable for the amount of $630 plus interest of $71 had been collected by the bank. The bank charged a collection fee of $20.00 and credited the remaining $681.00 to Churros Ltd.’s account. (4) A deposit of $801.50 was in transit on 31 January. (1) The accountant discovered that cheque no. 103 for $225 in payment of insurance premium had been incorrectly recorded in the cash payments journal as $252. Required: (a) Prepare bank reconciliation for Churros Ltd as of 31 January 2020 (adjust both Bank and Book side). (b) Prepare the general journal entries necessary to bring the cash at bank account into agreement with the adjusted balance on the bank reconciliation (ignore GST and narration). All services provided by the bank are recorded into service fees account.

The following information relates to the equity investments to Benji Company on 2020.

1. On January 1, Benji acquires 50,000 ordinary shares (represent 30% ownership) of Coconut Plc for $130,000.
2. On May 1, Benji purchased 2,000 shares (less than 10% ownership) of Dodo Co. at $18 per share.
3. On June 1, Benji purchased 3,000 shares (less than 10% ownership) of Denver Co. at $15 per share
4. On July 1, Benji sold 500 shares of Dodo for $19 per share.
5. On September 30, Coconut declared and paid cash dividend totaling to $ 100,000
6. On December 1, Dodo declared and paid a $1 per share cash dividend.
7. On December 10, Denver declared a cash dividend of $2 per share to be paid in the next month.
8. On December 31, Coconut, Denver, and Dodo reported net income $230,000; $400,000; and 325,000 respectively.
9. At December 31, 2020, the shares had the following price per share value: Coconut $25, Dodo $17 and Denver $17

Instructions

1. Prepare any journal entries you consider necessary, including year-end entries (December 31), assuming these investments (except investment in Coconut Plc. share) are managed to profit from changes in market price (held for trading). Benji Company doesn’t have equity investment before 2020.
2. Prepare a partial statement of financial position showing the Investment account at December 31, 2020