9 31 nts eBook Exercise 8-17A (Algo) Effect of revenue expenditures versus capital expenditures on financial statements LO 8-8 Sellers Construction Company purchased a compressor for $106,600 cash. It had an estimated useful life of four years and a $10,400 salvage value. At the beginning of the third year of use, the company spent an additional $8,950 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model: Hint Ask Balance Sheet Assets Book Value of Cash 11,390 + Compressor 58,500 Stockholders' Equity Retained Common Stock Earnings 25,800 44,090 Income Statement Statement of Revenue NA Expense Net Income Cash Flows NA NA NA Required Record the $8,950 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. a. The expenditure was for routine maintenance. b. The expenditure extended the compressor's life. c. The expenditure improved the compressor's operating capacity. Required Record the $8,950 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 nvesting activity. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require input. a. The expenditure was for routine maintenance. b. The expenditure extended the compressor's life. c. The expenditure improved the compressor's operating capacity. a b. C Sellers Construction Company Horizontal Statements Model Balance Sheet Income Statement Assets Stockholders' Equity Book Value of Cash Compressor Common Stock Retained Revenue Expenses Net Income Statement of Cash Flows Earnings 11,390 58,500 = 25,800+ 44,090