Exercise 8-17A (Algo) Effect of revenue expenditures versus capital expenditures on financial statements LO 8-8 Sellers Construction Company purchased a compressor for $115,000 cash. It had an estimated useful life of four years and a $9,900 salvage value. At the beginning of the third year of use, the company spent an additional $9,380 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model: Balance Sheet Assets Stockholders' Equity Income Statement Statement of Cash Book Value Cash Flows of Compressor Com. Stk. Ret. Earn. Rev. Exp. = Net Inc. 12,810 + 62,450 23,600 51,660 NA + + + NA NA NA Required Record the $9,380 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 Income Statement Sellers Construction Company Horizontal Statements Model Balance Sheet Assets Stockholders' Equity Book Value of Common Retained Cash Revenue Compressor Stock Earnings 12,810 62,450 - 23,600 51,660 Expenses Net Income Statement of Cash Flows Income Statement Balance Sheet Assets Book Value of Compressor 62, 450 Statement of Cash Flows Cash 12,810 Stockholders' Equity Com. Stk. + Ret. Earn. 23,600 51,660 Rev. - Exp. = NA NA Net Inc. NA NA OOK Hint Required Record the $9,380 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 erences Income Statement Sellers Construction Company Horizontal Statements Model Balance Sheet Assets Stockholders' Equity Book Value of Common Retained Revenue Cash Compressor Stock Earnings 12,810 + 62.450 = 23,600 + 51,660 Statement of Cash Flows Net Income Expenses + a + b. + + C + +