Notes a) Wages prepaid at the yearend amounted to $6,000; Rates accrued amounted to $2,000. b) The provision for bad debts is to be revised to 5% of accounts receivable at the end of the financial year of the business c) Stock at December 31,2017 amounted to $32,300; however it appears that an additional amount, $2,700 was found in a store room. The amount was deemed material and needs to be accounted for in the financial statements d) Motor Vehicle is to be depreciated using the reducing balance method at a rate of 15% per annum; eccuipment at 10% using the reducing balance method and the straight line method is to be used to depreciate the Building at a rate of 5% per annum. e) Commission received owing amounted to $2,000 f) On September 1, 2017, the owner took goods amounting to $2,000 from the warehouse and continued to do so at the beginning of every month up to March 2018. g) The rent received amount was from Mr Brown renting a section of his premises to Raymond Pryce, his cousin, on January 1, 2017 for $4,000 per month. However, on March 1,2017 he increased the rent by 20%. Required: 1. Prepare Micah Brown's Statement of Profit or Loss 2. Prepare Micah Brown's Statement of Financial Position (15 marks) 3. Why is the distinction between classifying something as capital expenditure and classifying it as revenue expenditure so important to the users of financial statements (5 marks) 4. 'Materiality' is a concept which sometimes has an effect on capitalisation of amounts within a statement of financial position. Give ONE example of how this may be done. (5 marks) Question 1