Final answer:
The items that should be treated as capital expenditure in the financial statements of a sole trader are the £800 spent on purchasing a new PC to replace his secretary's old one and the £2,000 on purchasing a machine for resale.
On the other hand, the £500 taken by the proprietor to buy himself a music system and the £150 paid to a painter for redecorating his office should be treated as revenue expenditure.
Step-by-step explanation:
Among the given options, the items that should be treated as capital expenditure in the financial statements of a sole trader are B) £800 spent on purchasing a new PC to replace his secretary's old one and C) £2,000 on purchasing a machine for resale.
B) £800 sent on purchasing a new PC to replace his secretary's old one can be considered a capital expenditure because it is an investment in a long-term asset that will provide economic benefits to the sole trader's business for several years.
C) £2,000 on purchasing a machine for resale is also a capital expenditure as it involves acquiring a new asset that will be used in the sole trader's business to generate revenue over an extended period of time.
On the other hand, A) £500 taken by the proprietor to buy himself a music system and D) £150 paid to a painter for redecorating his office should be treated as revenue expenditure since they are expenses incurred for the day-to-day running of the business and do not result in the acquisition of long-term assets.