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Sellers Construction Company purchased a compressor for $105,300 cash. It had an estimated useful life of four years and a $8,600 salvage value. At the
Sellers Construction Company purchased a compressor for $105,300 cash. It had an estimated useful life of four years and a $8,600 salvage value. At the beginning of the third year of use, the company spent an additional $8,420 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model: Equity Exp. Rev. Net Inc. Cash Flow Cash 10,330 Assets Book Value of Compressor 56,950 Com. stk. 22,200 Ret. Earn 45,080 NA NA NA NA Required Record the $8,420 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 Revenue Expenses Net Income Cash Flow Assets Book Value of Cash Compressor 10,330 56,950 Stockholders' Equity Common Retained Stock Earnings 22,200 45,080 b
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