Problem 2-2A Preparing and posting journal entries; preparing a trial balance LO C3, C4, A1, P1, P2

Aracel Engineering completed the following transactions in the month of June.

1. Jenna Aracel, the owner, invested $185,000 cash, office equipment with a value of $9,200, and $73,000 of drafting equipment to launch the company.
2. The company purchased land worth $51,000 for an office by paying $6,900 cash and signing a long-term note payable for $44,100.
3. The company purchased a portable building with $55,000 cash and moved it onto the land acquired in b.
4. The company paid $2,600 cash for the premium on an 18-month insurance policy.
5. The company completed and delivered a set of plans for a client and collected $9,600 cash.
6. The company purchased $29,000 of additional drafting equipment by paying $11,300 cash and signing a long-term note payable for $17,700.
7. The company completed $19,500 of engineering services for a client. This amount is to be received in 30 days.
8. The company purchased $1,050 of additional office equipment on credit.
9. The company completed engineering services for $29,000 on credit.
10. The company received a bill for rent of equipment that was used on a recently completed job. The $1,656 rent cost must be paid within 30 days.
11. The company collected $5,000 cash in partial payment from the client described in transaction g.
12. The company paid $2,000 cash for wages to a drafting assistant.
13. The company paid $1,050 cash to settle the account payable created in transaction h.
14. The company paid $1,190 cash for minor maintenance of its drafting equipment.
15. Jenna Aracel withdrew $10,140 cash from the company for personal use.
16. The company paid $1,300 cash for wages to a drafting assistant.
17. The company paid $2,900 cash for advertisements on the Web during June.

Required:
1. Prepare general journal entries to record these transactions using the following titles: Cash (101); Accounts Receivable (106); Prepaid Insurance (108); Office Equipment (163); Drafting Equipment (164); Building (170); Land (172); Accounts Payable (201); Notes Payable (250); J. Aracel, Capital (301); J. Aracel, Withdrawals (302); Engineering Fees Earned (402); Wages Expense (601); Equipment Rental Expense (602); Advertising Expense (603); and Repairs Expense (604).
2. Post the journal entries from part 1 to the ledger accounts.
3. Prepare a trial balance as of the end of June.

Problem 2-2A Preparing and posting journal entries; preparing a trial balance LO C3, C4, A1, P1, P2

Aracel Engineering completed the following transactions in the month of June.

1. Jenna Aracel, the owner, invested $200,000 cash, office equipment with a value of $5,400, and $60,000 of drafting equipment to launch the company.
2. The company purchased land worth $53,000 for an office by paying $9,200 cash and signing a long-term note payable for $43,800.
3. The company purchased a portable building with $58,000 cash and moved it onto the land acquired in b.
4. The company paid $4,700 cash for the premium on an 18-month insurance policy.
5. The company completed and delivered a set of plans for a client and collected $8,800 cash.
6. The company purchased $28,000 of additional drafting equipment by paying $11,400 cash and signing a long-term note payable for $16,600.
7. The company completed $17,500 of engineering services for a client. This amount is to be received in 30 days.
8. The company purchased $1,300 of additional office equipment on credit.
9. The company completed engineering services for $22,000 on credit.
10. The company received a bill for rent of equipment that was used on a recently completed job. The $1,475 rent cost must be paid within 30 days.
11. The company collected $6,000 cash in partial payment from the client described in transaction g.
12. The company paid $2,400 cash for wages to a drafting assistant.
13. The company paid $1,300 cash to settle the account payable created in transaction h.
14. The company paid $915 cash for minor maintenance of its drafting equipment.
15. Jenna Aracel withdrew $10,070 cash from the company for personal use.
16. The company paid $1,900 cash for wages to a drafting assistant.
17. The company paid $2,600 cash for advertisements on the Web during June.

Required:
1. Prepare general journal entries to record these transactions using the following titles: Cash (101); Accounts Receivable (106); Prepaid Insurance (108); Office Equipment (163); Drafting Equipment (164); Building (170); Land (172); Accounts Payable (201); Notes Payable (250); J. Aracel, Capital (301); J. Aracel, Withdrawals (302); Engineering Fees Earned (402); Wages Expense (601); Equipment Rental Expense (602); Advertising Expense (603); and Repairs Expense (604).
2. Post the journal entries from part 1 to the ledger accounts.
3. Prepare a trial balance as of the end of June.

12.

A wonderful, smart student named “SHINY STAR” enrolled in an online college, called “SUBPERB 4-YEAR TURN YOUR LIFE INTO A MILLION DOLLARS UNIVERSITY.”

When Shiny Star was meeting with his advisor, the advisor told Shiny Star that the college was one of the cheapest colleges around.

However, 2 years into his degree, Shiny Star compared prices and realized that other colleges around were much, much cheaper than “SUBPERB 4-YEAR TURN YOUR LIFE INTO A MILLION DOLLARS UNIVERSITY.”

Shiny Star was upset. He sued the school in District Court, claiming the school had violated competition laws and false advertising laws.

In defense, the University argued that its’ enrollment agreement clearly contained a requirement that all disputes be arbitrated. Shiny Star signed this agreement when he paid and enrolled in classes. The University presented the signed agreement to arbitrate and the District Court dismissed Shiny Star’s case.

This is an example of a contract that agrees to the place or the manner in which the lawsuit will be handled.

What is the legal term for such an agreement to handle the case through arbitration, for example?

CASE 2: RELATED PARTY TRANSACTIONS
According to its website, Tradewinds (M) Bhd. (“Tradewinds”) is an investment holding company with core businesses in oil palm and sugar. Its authorized capital is RM500 million, and paid-up capital is RM296.5 million. According to its 2008 Annual Report, its trade receivables as at 31 December 2008 was RM323.2 million, and 65% thereof (RM209.9 million) were due from its related parties. A big portion of it (RM193.9 million or 60%) arose from its transactions with Bukhary Sdn. Bhd. (“Bukhary”). This was an increase from the previous year where its total trade receivables was RM315.1 million, of which RM176.7 million (56%) were due from its related parties. Bukhary’s debts then amounted to RM167.8 million (53%). The increase was notwithstanding the increase in the normal credit term from 60 days to 90 days. Further, the interest for late payment was reduced from 18% in 2007 to 6.5% in 2008.

It is observed that the trade receivables from Bukhary arose from the sale of refined sugar from Gula Padang Terap Sdn. Bhd. (“GPT”) which is a subsidiary of Tradewinds. For the financial year 2008, the aggregate value of the sale was RM165 million. It would be interesting to find out what is the total sale of GPT and the credit terms given to other purchasers, for Para 10.09(2) of the Bursa Malaysia Listing Requirements demand that the recurrent related party transactions must be “in the ordinary course of business and are on terms not more favourable to the related party than those generally available to the public”. The 2008 Annual Report also revealed that among the interested directors or shareholders in this recurrent related party transaction were Syed Azmin Syed Nor (“Syed Azmin”), who was also a member of the Audit Committee (“AC”). Syed Azmin was said to be a non-independent non- executive director because he is the brother of Syed Mokhtar who held an indirect major shareholding in Tradewinds. One of the functions of the AC is to review the related party transactions and conflict of interests situation. The issue is how independent is the AC where one of its members has already declared his interest in Bukhary which is a substantial debtor of the group. Further, the following observations which also raise questions on the independence of the AC are made.
The members of the AC were somewhat “connected”. The Chairman of the Committee, Ooi Teik Huat (“Ooi”), was also a director of MMC Corporation, DRB-Hicom Bhd., EON Bhd., Tradewinds Plantations Bhd. and Johor Port Bhd. These companies share a common substantial shareholder in Syed Mokhtar who is the brother of Syed Azmin. The other member of the AC was Khalid bin Sufat (“Khalid”), an independent non-executive director who was also appointed a director of a company known as Amtek Holdings Bhd. Syed Azmin was also a director of this company. It is also observed that Ooi and Khalid were appointed on 1 April 2009, upon the resignation of two directors who were also members of the AC. The reasons for their resignation from the board and AC were not revealed.
However, despite the mounting debts and the issue whether the deal with Bukhary was an arm’s length transaction, the shareholders of Tradewinds had at the company’s annual general meeting on 17 June 2009, renewed its mandate for recurrent related party transactions with Bukhary for an estimated value of RM300 million from 17 June 2009 to 16 June 2010.
Source: Adapted from IABR & ITLC Conference Proceedings, 2010.
Required:
Determine the related parties, related party transactions and the reporting company in the above case.

Explain how the related party transactions above affect shareholders’ interest.

Discuss how the audit committee neutrality can be affected by the appointment of family members in it.

4) a. Suppose that the Federal Government under Donald Trump Administration announced a tax rebate of $500 for all individuals filing singly and $1000 for all families filing jointly or as head of household in the upcoming tax year. Further, suppose that the Government budget included a broad-based reduction in Government spending on goods and services, whose total amount was equal to the total amount of the tax rebates. What would be the overall impact on AD of this policy change, or would the policy change effects completely cancel each other out? Hint: Tax rebate (A negative tax and direct government expenditure in infrastructure development and construction do not have an identical effect in magnitudes). Need to look at both tax multiplier and Government expenditure multiplier explained in the textbook) Explain your answer in detail. 4 pts

4) b. Trump’s imposition of $260 billion tariff in the Month of May 2019 (taxes on imports to the US Market) on Chinese exports to the US has caused a global tension in financial markets and related business activities. In retaliation of Trump’s tariff, China also imposed almost similar amount of tariff on US exports to China about $200 billon. In response to this trade war between the US and China, the US stock price indices of the Wall Street plummeted in May and June 2019. Th stock market in Shanghai in China also crashed at the same time. The data on new job for the US economy in May showed a very slow rate jib creation at the same time. Given this scenario from the US-China trade war and given your knowledge on macro model of AD an AS, do you think the recession is in the horizon to hit the US economy in early 2020? Give your reason in your opinion as to why or why not the case. 4 pts

Dave Merrill vacationed at Lake Tahoe last winter.​ Unfortunately, he broke his ankle while skiing and spent two days at the Sierra University Hospital. Merrill​'s insurance company received a $4,400

bill for his​ two-day stay.

One item that caught Merrill​'s attention was an $11.75 charge for a roll of cotton. Merrill

is a salesman for Johnson​ & Johnson and knows that the cost to the hospital of the roll of cotton is between $2.15 to $2.95. He asked for a breakdown of the $11.75 charge. The accounting office of the hospital sent him the following​information:

Merrill believes the overhead charge is outrageous. He​ comments, "There was nothing I could do about it. When they come in and dab your​ stitches, it's not as if you can​ say, 'Keep your cotton roll. I brought my​ own.'"

Should US consumers increase spending by more than the increase in personal income?
Instruction: You could use an example from your life or another example to relate to this topic.

1. Having read the case on sovereign risk, what are the economic and political challenges that Europe face due to the Pandemic that are different from what we face here in the US? (10 points)

The jersey numbers of 11 players randomly selected from the football team. Find the range , variance and standard devation for the given sample data and what the result tell us? 29,51,46,90,32,1,16,44,99,10,49