Exercise 8-17A (Algo) Effect of revenue expenditures versus capital expenditures on financial statements LO 8-8 Sellers...

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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 $101,300 cash. It had an estimated useful life of four years and a $10,000 salvage value. At the beginning of the third year of use, the company spent an additional $7150 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model Balance Sheet Income Statement Assets Stockholders Equity Statement of Book Value Cash Flows Cash 11,250 of Compressor 55,650 Com. Stk. + 22,600 NA Ret. Earn. Rev. Exp. Net Inc. 44,300 NA NA NA Required Record the $7150 expenditure in the statements model under each of the following independent assumptions: (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. Exercise 8-17A (Algo) Effect of revenue expenditures versus capital expenditures on financial statements LO 8-8 Sellers Construction Company purchased a compressor for $101,300 cash. It had an estimated useful life of four years and a $10,000 salvage value. At the beginning of the third year of use, the company spent an additional $7150 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model Balance Sheet Income Statement Assets Stockholders Equity Statement of Book Value Cash Flows Cash 11,250 of Compressor 55,650 Com. Stk. + 22,600 NA Ret. Earn. Rev. Exp. Net Inc. 44,300 NA NA NA Required Record the $7150 expenditure in the statements model under each of the following independent assumptions: (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.