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Sellers Construction Company purchased a compressor for $116,100 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 $116,100 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 $7,920 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model:
Sellers Construction Company purchased a compressor for $116,100 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 $7,920 related to the equipment. The company's financial condition just prior to this expenditure is shown in the following statements model: Equity Net Inc Cash Flow Assets Rev Exp. = Book Value of Com. Stk. Ret. Earn 49,920 Cash Compressor 62,350 11,370 23,800 NA NA NA = NA Required Record the $7,920 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. Stockholders' Equity Net Income Cash Flow Assets Revenue Expenses = Book Value of Retained Common Stock Cash Compressor Earnings 49,920 11.370 62,350 23,800 + + a + C
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