Answered

Westonci.ca makes finding answers easy, with a community of experts ready to provide you with the information you seek. Discover detailed answers to your questions from a wide network of experts on our comprehensive Q&A platform. Get quick and reliable solutions to your questions from a community of experienced experts on our platform.

Paid $42,000 cash to replace a motor on equipment that extends its useful life by four years. Paid $210 cash per truck for the cost of their annual tune-ups. Paid $168 for the monthly cost of replacement filters on an air-conditioning system. Completed an addition to a building for $236,250 cash. 1. Classify the above transactions as either a revenue expenditure or a capital expenditure. 2. Prepare the journal entries to record the four transactions from part 1.

Sagot :

Zviko

Answer:

Part 1

Replacement of motor on equipment - Capital Expenditure

Cost of Initial tune -ups - Capital Expenditure

Replacement filters on an air-conditioning system - Revenue Expenditure

Addition to a Building - Capital Expenditure

Part 2

Item 1

Debit : Equipment $42,000

Credit : Cash $42,000

Item 2

Debit : Truck $210

Credit : Cash $210

Item 3

Debit : Replacement expense $168

Credit : Cash $168

Item 4

Debit : Buildings $236,250

Credit : Cash $236,250

Explanation:

Capital Expenditure is any expenditure incurred to enhance the economic value of an asset. This include improvements or costs directly incurred to place the asset in the location and condition intended for use by the management.

Revenue Expenditure is any expenditure incurred to maintain daily operations of the company. This includes repairs and maintenance expenses.

Thanks for using our service. We aim to provide the most accurate answers for all your queries. Visit us again for more insights. Thank you for choosing our platform. We're dedicated to providing the best answers for all your questions. Visit us again. Discover more at Westonci.ca. Return for the latest expert answers and updates on various topics.