Sellers Construction Company purchased a compressor for $107,600 cash. It had an estimated useful life of four years and a $11,400 salvage value. At the beginning of the third year of use, the company spent an additional $7,740 related to the equipment.

Sellers Construction Company purchased a compressor for $107,600 cash. It had an estimated useful life of four years and a $11,400 salvage value. At the beginning of the third year of use, the company spent an additional $7,740 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model Equity Assets Rev. xp. Net Inc. Cash Flow Book Value of Ret. Earn 47,690 Cash Com. Stk. 23,100 Co r 59,500 11,290 NA NA NA NA Required Record the $7,740 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. =Net Income Assets Stockholders' Equity Revenue Expenses Cash Flow Book Value of Compressor Common Stock Retained Cash + Earnings 59,500 11,290 23,100 47,690 + + a b + C | | |