Answer question C and D on the second page

Trial Balance as at 30 September 2019 E'000 E'000 4% Bank loan Accumulated depreciation - Buildings at 1 October 2018 Accumulated depreciation - Equipment at 1 October 2018 Allowance for receivables at 1 October 2018 Bank Bank loan interest paid Buildings - Cost Capital at 1 October 2018 Carriage inwards Carriage outwards Cash Discounts allowed Discounts received Drawings Equipment - Cost General expenses Insurance Inventory at 1 October 2018 Light and heat Payables Purchases Receivables Returns inwards Returns outwards Sales Wages 420 75 960 160 1882 1960 Additional information: 1. The owner sold some equipment on 25 October 2019 for 30,000. He has recorded the cash received correctly but nothing else. The equipment originally cost 80,000 on 1 May 2012 2. The building cost includes land valued at 160,000. Depreciation is to be provided at 20% p.a. reducing balance on equipment and 2% p.a. straight line on buildings. A full year of depreciation is charged in the year of acquisition and none in the year of disposal. Scowen took goods out of the business, for his own use, from inventory that cost 16,000. No entries have been made in the books of account for this transaction. 5. The insurance figure includes 9,000 for the year to 31 March 2020. 6. The bank loan was taken out in October 2010. In May 2020, 200,000 will be repaid and the remainder of the loan is to be repaid in September 2025. 7. 8. An accrual for light and heat for the months of August and September 2019 is needed. Inventory at 30 September 2019 cost 130,000 and has a net realisable value of 165,000 On reviewing the list of receivables at the end of the year, it has been decided that an irrecoverable debt of 6,000 is to be written off and an allowance is required against a debt of 3,000. Goods returned to a supplier that cost 16,000 have been correctly recorded in returns outwards but have been credited to receivables. 10. You are required to: Explain what is meant by the terms capital expenditure and revenue expenditure in financial accounting. Give examples of each and explain why it is necessary to account for them differently. (20 Marks) Set up a suspense account and explain its uses. (10 Marks) Record any journal entries required to deal with the above additional information and show that the suspense account is cleared. (35 Marks) Prepare a statement of profit or loss and a statement of financial position, in good style, for Scowen's Grocery Store for the year ended 31 October 2019. (35 Marks) (d) Trial Balance as at 30 September 2019 E'000 E'000 4% Bank loan Accumulated depreciation - Buildings at 1 October 2018 Accumulated depreciation - Equipment at 1 October 2018 Allowance for receivables at 1 October 2018 Bank Bank loan interest paid Buildings - Cost Capital at 1 October 2018 Carriage inwards Carriage outwards Cash Discounts allowed Discounts received Drawings Equipment - Cost General expenses Insurance Inventory at 1 October 2018 Light and heat Payables Purchases Receivables Returns inwards Returns outwards Sales Wages 420 75 960 160 1882 1960 Additional information: 1. The owner sold some equipment on 25 October 2019 for 30,000. He has recorded the cash received correctly but nothing else. The equipment originally cost 80,000 on 1 May 2012 2. The building cost includes land valued at 160,000. Depreciation is to be provided at 20% p.a. reducing balance on equipment and 2% p.a. straight line on buildings. A full year of depreciation is charged in the year of acquisition and none in the year of disposal. Scowen took goods out of the business, for his own use, from inventory that cost 16,000. No entries have been made in the books of account for this transaction. 5. The insurance figure includes 9,000 for the year to 31 March 2020. 6. The bank loan was taken out in October 2010. In May 2020, 200,000 will be repaid and the remainder of the loan is to be repaid in September 2025. 7. 8. An accrual for light and heat for the months of August and September 2019 is needed. Inventory at 30 September 2019 cost 130,000 and has a net realisable value of 165,000 On reviewing the list of receivables at the end of the year, it has been decided that an irrecoverable debt of 6,000 is to be written off and an allowance is required against a debt of 3,000. Goods returned to a supplier that cost 16,000 have been correctly recorded in returns outwards but have been credited to receivables. 10. You are required to: Explain what is meant by the terms capital expenditure and revenue expenditure in financial accounting. Give examples of each and explain why it is necessary to account for them differently. (20 Marks) Set up a suspense account and explain its uses. (10 Marks) Record any journal entries required to deal with the above additional information and show that the suspense account is cleared. (35 Marks) Prepare a statement of profit or loss and a statement of financial position, in good style, for Scowen's Grocery Store for the year ended 31 October 2019. (35 Marks) (d)