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Exercise 8-17A (Algo) Effect of revenue expenditures versus capital expenditures on financial statements LO 8-8 Sellers Construction Company purchased a compressor for $103,300 cash. It had an estimated useful life of four years and a $8,400 salvage value. At the beginning of the third year of use, the company spent an additional $7,110 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model: Balance Sheet Assets Cash + 13,900 + Book Value of Compressor . 55,850 . a b. C Required Record the $7,110 expenditure in the statements model under each of the following independent assumptions: Note: In the Statement of Cash Flows column, use the initials "OA" for operating activities, "FA" for financing activities, and "IA" for investing activity. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require input. Cash a. The expenditure was for routine maintenance. b. The expenditure extended the compressor's life. c. The expenditure improved the compressor's operating capacity. Assets . 13,900. . . Stockholders' Equity Retained + Earnings 46,350 Common Stock 23,400 Book Value of Compressor Balance Sheet 55,850 . = " Common Stock Income Statement Statement of Revenue Expense Net Income Cash Flows NA NA NA NA Sellers Construction Company Horizontal Statements Model Stockholders' Equity 23,400+ + + Retained Earnings 46,350 Revenue Income Statement Expenses Net Income Statement of Cash Flows

Exercise 8-17A (Algo) Effect of revenue expenditures versus capital expenditures on financial statements LO 8-8 Sellers Construction Company purchased a compressor for $103,300 cash. It had an estimated useful life of four years and a $8,400 salvage value. At the beginning of the third year of use, the company spent an additional $7,110 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model: Balance Sheet Assets Cash + 13,900 + Book Value of Compressor . 55,850 . a b. C Required Record the $7,110 expenditure in the statements model under each of the following independent assumptions: Note: In the Statement of Cash Flows column, use the initials "OA" for operating activities, "FA" for financing activities, and "IA" for investing activity. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require input. Cash a. The expenditure was for routine maintenance. b. The expenditure extended the compressor's life. c. The expenditure improved the compressor's operating capacity. Assets . 13,900. . . Stockholders' Equity Retained + Earnings 46,350 Common Stock 23,400 Book Value of Compressor Balance Sheet 55,850 . = " Common Stock Income Statement Statement of Revenue Expense Net Income Cash Flows NA NA NA NA Sellers Construction Company Horizontal Statements Model Stockholders' Equity 23,400+ + + Retained Earnings 46,350 Revenue Income Statement Expenses Net Income Statement of Cash Flows

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Exercise 8-17A (Algo) Effect of revenue expenditures versus capital expenditures on financial statements LO 8-8 Sellers Construction Company purchased a compressor for $103,300 cash. It had an estimated useful life of four years and a $8,400 salvage value. At the beginning of the third year of use, the company spent an additional $7,110 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model: Cash 13,900 + Assets Book Value of Compressor 55,850 a. b. C. Cash Balance Sheet Assets a. The expenditure was for routine maintenance. b. The expenditure extended the compressor's life. c. The expenditure improved the compressor's operating capacity. 13,900 + Required Record the $7,110 expenditure in the statements model under each of the following independent assumptions: Note: In the Statement of Cash Flows column, use the initials "OA" for operating activities, "FA" for financing activities, and "IA" for investing activity. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require input. +++ Stockholders' Equity Retained Earnings 46,350 Common + Stock 23,400 + Book Value of Compressor Balance Sheet 55,850 W Revenue NA Stockholders' Equity Common Stock 23,400 + Sellers Construction Company Horizontal Statements Model Income Statement Retained Earnings Statement of Expense Net Income Cash Flows NA = NA NA 46,350 Revenue Income Statement Expenses Net Income Statement of Cash Flows
Transcribed Image Text:Exercise 8-17A (Algo) Effect of revenue expenditures versus capital expenditures on financial statements LO 8-8 Sellers Construction Company purchased a compressor for $103,300 cash. It had an estimated useful life of four years and a $8,400 salvage value. At the beginning of the third year of use, the company spent an additional $7,110 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model: Cash 13,900 + Assets Book Value of Compressor 55,850 a. b. C. Cash Balance Sheet Assets a. The expenditure was for routine maintenance. b. The expenditure extended the compressor's life. c. The expenditure improved the compressor's operating capacity. 13,900 + Required Record the $7,110 expenditure in the statements model under each of the following independent assumptions: Note: In the Statement of Cash Flows column, use the initials "OA" for operating activities, "FA" for financing activities, and "IA" for investing activity. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require input. +++ Stockholders' Equity Retained Earnings 46,350 Common + Stock 23,400 + Book Value of Compressor Balance Sheet 55,850 W Revenue NA Stockholders' Equity Common Stock 23,400 + Sellers Construction Company Horizontal Statements Model Income Statement Retained Earnings Statement of Expense Net Income Cash Flows NA = NA NA 46,350 Revenue Income Statement Expenses Net Income Statement of Cash Flows
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