Exercise 8-17A Effect of revenue expenditures versus capital expenditures on financial statements LO 8- 8 Sellers Construction Company purchased a compressor for $117,400 cash. It had an estimated useful life of four years and a $8,200 salvage value. At the beginning of the third year of use, the company spent an additional $8,780 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model: Equity Rev. Exp. Net Inc. Cash Flow Assets Book Value of Compressor 62,800 + = + Cash 11,400 Com. stk. 23, 100 Ret. Earn. 51, 100 + + NA NA NA NA Required Record the $8,780 expenditure in the statements model under each of the following independent assumptions: (In the Cash Flow column, use the initials "OA" for operating activities, "FA" for financing activities, and "IA" for Investing activity. Enter any decreases to account balances with a minus sign. Not all cells in the "Cash Flow" column may require an input - leave cells blank if there is no corresponding input needed.) a. The expenditure was for routine maintenance. b. The expenditure extended the compressor's life. c. The expenditure improved the compressor's operating capacity. a. The expenditure was for routine maintenance. b. The expenditure extended the compressor's life. c. The expenditure improved the compressor's operating capacity. Revenue - Expenses = Net Income Cash Flow Assets Book Value of Cash + Compressor 11,400 + 62,800 = Stockholders' Equity Common Retained Stock Earnings 23,100 + 51,100 a. + + b. + + c. + +