using knife cut issue

Hi, would like to find out is there any way to change the direction of the knife cut? i keep trying many angles but it turn out the same after i select midpoint for the type. see attached photo to get what i mean. what i want is a square like the second picture. not a diagonal square. can someone enlighten me?

Thanks.

can someone enlighten me?
It’s cutting where you tell it to cut and then joining the points with a straight line to give the result. You’ll have to correct this afterwards if you want something different. You can do this easily with scaling the points either by positioning the curser or using vertex snapping (http://screencast.com/t/u2zrhJpfpGE)

Thanks Richard for the help! the video is really great. I appreciate it =D