Question 4 (30 Marks) (a) Prepare journals for each of the below transactions relating to the business of Abbott a sole trader. Date Details 2 3 4 5 6 Abbott introduces $30,000 cash as capital. Abbott borrows $40,000 to purchase a van. Abbott buys a market stall for $5,000 cash. Abbott buys inventory for $18,000 on credit. Abbott pays his supplier $10,000. Abbott sells inventory for $12,000 cash. Abbott sells inventory for $9,000 on credit. Abbott repays $10,000 of the loan. Abbott pays his trade suppliers $6,000. Abbott receives $8,000 of the money owed to him by the customer (receivable). [15 Marks) 7 8 9 10 (b) (0) Briefly distinguish between capital and revenue expenditure [6 Marks] (ii) Explain whether the below items are capital or revenue expenditure : a. Paid a bill of $10,000 of Mr. King, who was engaged as the erection engineer to set up a new automatic machine costing $20,000 at the new factory site. b. Incurred $26,000 expenditure on varied advertisement campaigns under taken yearly, on a regular basis, during the peak festival season. C. In accordance with the long-term plan of providing a well- equipped Labour Welfare Centre, spent $90,000 being the budgeted allocation for the year. (9 Marks)