Exercise 8-17A (Algo) Effect of revenue expenditures versus capital expenditures on financial statements LO 8-8 Sellers Construction Company purchased a compressor for $113,200 cash. It had an estimated useful life of four years and a $9,400 salvage value. At the beginning of the third year of use, the company spent an additional $9,120 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model: Balance Sheet Stockholders' Equity Cash + 12,800+ Required Assets Book Value of Compressor 61,300 Income Statement Common Retained Stock + Earnings 23,800 + 50,300 Statement of Revenue NA Expense Net Income Cash Flows NA NA NA Record the $9,120 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. Sellers Construction Company Horizontal Statements Model Balance Sheet Income Statement Assets Stockholders' Equity Statement of Cash Cash Book Value of Compressor Common Stock Retained Earnings Revenue Expenses Net Income Flows 12,800+ 61,300 23,800+ 50,300 a. b. + + C. +