1.On further investigations, the suspense was discovered to have resulted from the following errors

1. The sales of goods on credit to Alex Otis amounting to $19000 been recorded in the sales journal as $9000

2. A receipt of $20000 from sale of an item of equipment had been credited to sales account. The equipment was shown in the books of account at costs of$90000 and accumulated depreciation $72000

3. A credit note from a supplier, simon for $15000 has been omitted from the books

4. A bank overdraft for $7000 reflected in the cash book as at 31 st December 2005 was omitted in trial balance

5. Discount received from the supplier of $8200 had been entered on the wrong side of purchases ledger control account

6. On 31 December goods valued at $ 9600 were returned by jane. No entry had been made in any other account to reflect the transaction

7. Discount allowed had been overcast by $1200

Required:

a. Journal entries to correct the above errors

b. Suspense account

c. Statement corrected net profit for the year ende 31 December 2005

d. Corrected balance sheet

2.Please explain the revenue Recognition and matching principles

3.How does the inventory write down affects the three statements?

4.Under what circumstances does the good will increase

5.When do you capitalize rather than expense a purchase?

6.What is the difference between deferred revenue and account receivable

7.If the cash collected from the customers is not yet recorded as revenues, What happen to it ?

8.What does have negative working capital means

9.What happens on the income statement if the inventory goes up

10.Define deferred tax asset and how is the value created?