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

Whispering Inc. reported the following pretax income (loss) and related tax rates during the years 2019–2022. Pretax Income (loss) Tax Rate 2019 $104,000 40 % 2020 (234,000) 40 % 2021 260,000 20 % 2022 130,000 20 % Pretax financial income (loss) and taxable income (loss) were the same for all years since Whispering began business. The tax rates from 2019–2022 were enacted in 2019. New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect. Prepare the journal entries for the years 2020–2022 to record income taxes payable (refundable), income tax expense (benefit), and the tax effects of the loss carryforward. Assume that Whispering expects to realize the benefits of any loss carryforward in the year that immediately follows the loss year. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit 2020 2021 2022 eTextbook and Media List of Accounts New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect. Prepare the portion of the income statement, starting with “Operating loss before income taxes,” for 2020. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Whispering Inc. Income Statement (Partial) $ $

Beacon Tours, a Tasmanian tourism business has recently expanded into catering as Vega one of their employees had been sponsored by the business to take a cooking qualification. This was a good addition to the business as feeding and entertaining paying guests has become expected. In October 2019 Beacon Tours, trading under their newly registered business name of Beacon Catering, agreed to cater for a wedding on the 12 January 2020. A term of the contract provided for the food to be delivered to the wedding venue ‘before 7 o’clock’ on the 12 January 2020. Believing that it is an evening wedding Beacon Catering had the food ready and attempted to deliver it to the venue by 6pm on the 12 January 2020. The customer, Canopus, who had contracted them refused to accept the food saying that the food was supposed to be delivered by 7am on the 12 January 2020 and that the wedding took place at midday and that therefore it had already taken place and food had been purchased last minute when Beacon Catering did not show up by 7am. The customer therefore refused to accept delivery due to the lateness of the hour.

Required: Can Beacon Catering sue Canopus for damages for non-acceptance? Is Beacon Catering liable to be sued by Canopus for breach of contract for failure to deliver?

Questions to Consider:

•Is the attempted delivery an issue of tender?

•What has to be established for a good tender?

•What did the contract say about delivery?

•Does the plaintiff’s action in attempting to make the delivery at 7pm satisfy this criterion?

•Note the operation of the Sale of Goods legislation in relation to delivery