Exercise 8-17A (Algo) Effect of revenue expenditures versus capital expenditures on financial statements LO 8.8 Sellers Construction Company purchased a compressor for $112500 cash. It had on estimated useful life of four years and a $9.400 salvage value. At the beginning of the thid year of use, the company spent an additional $9,560 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model Balance Sheet Income Statens Stockholders Equity Ret. Earn of Compressor 13,560 63,450 Assets Book Value Statement on Cash Flows Cash CoR. Stk. Rey Exp fet inca 23,600 53,410 NA NA TA NA Required Record the $9,560 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 Required Record the $9.560 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 Cash Common Retained Revenue Compressor Stock Earnings 13,560 - 63,450 = 23,600 53,410 Statement of Cash Flows Net Income Expenses D + + +