A. Cost of plant assets

Kegler Bowling installs automatic scorekeeping equipment with an invoice cost of $190,000. The electrical work required for the installation costs $20,000. Additional costs are $4,000 for delivery and $13,700 for sales tax. During the installation, a component of the equipment is carelessly left on a lane and hit by the automatic lane-cleaning machine. The cost of repairing the component is $1,850. What is the total recorded cost of the automatic scorekeeping equipment?

Revenue and capital expenditures

1. Classify the following as either a revenue expenditure or a capital expenditure.
   • a. Paid $40,000 cash to replace a compressor on a refrigeration system that extends its useful life by four years.
   • b .Paid $200 cash per truck for the cost of their annual tune-ups.
   • c. Paid $175 for the monthly cost of replacement filters on an air-conditioning system.
   • d. Completed an addition to an office building for $225,000 cash.
2. Prepare the journal entries to record transactions a and d of part 1.

B. Partnership income allocation

Ann Stolton and Susie Bright are partners in a business they started two years ago. The partnership agreement states that Stolton should receive a salary allowance of $15,000 and that Bright should receive a $20,000 salary allowance. Any remaining income or loss is to be shared equally. Determine each partner's share of the current year's net income of $52,000.

C. Liquidation of partnership

The Field, Brown & Snow partnership was begun with investments by the partners as follows: Field, $131,250; Brown, $165,000; and Snow, $153,750. The operations did not go well, and the partners eventually decided to liquidate the partnership, sharing all losses equally. On May 31, after all assets were converted to cash and all creditors were paid, only $45,000 in partnership cash remained.

Compute the capital account balance of each partner after the liquidation of assets and the payment of creditors.

D. Partial-year depreciation; disposal of plant asset

Rayya Co. purchases and installs a machine on January 1, 2015, at a total cost of $105,000. Straight-line depreciation is taken each year for four years assuming a seven-year life and no salvage value. The machine is disposed of on July 1, 2019, during its fifth year of service. Prepare entries to record the partial year's depreciation on July 1, 2019, and to record the disposal under the following separate assumptions:

1. The machine is sold for $45,500 cash.
2. An insurance settlement of $25,000 is received due to the machine's total destruction in a fire.