Question

QS 8-9 Revenue and capital expenditures LO C3 a. Paid $52,000 cash to replace a motor on equipment that extends its useful life by four years. b. Paid $260 cash per truck for the cost of their annual tune-ups. c. Paid $208 for the monthly cost of replacement filters on an air-conditioning system. d. Completed an addition to a building for $292,500 cash. 1. Classify the above transactions as either a revenue expenditure or a capital expenditure. 2. Prepare the journal entries to record transactions a and d. Complete this question by entering your answers in the tabs below. Required 1 Required 2 classify the above transactions as either a revenue expenditure or a capital expenditure. Transaction Required 2 >

Answer 1

Requirment 1 Trausaution Capital Revenue Revenue capital expenditure expenditure expenditure expenditure Explanation () in point a and d point stated ceaoly that replacement of motor leads to extends it useful life by four years Capital expenditure are those expenditure that enhances the capicity of Assets, Addition in building aloo ted leads to enhance the earning capicity of ouilding, Thus, both a and a are capital expenditure, Revenue expenditure are those expenditure which . does not enhance the capicity of Assets out maintains ito a includes monthly repair charges on Annual maintaine, . Both point o, and c au revenue expenditure because it does not enhance earning capillity of Assets but to maintain it

Requioment 2 : Joyon af entries credit Toonsanto a. 1 General Jounol . 1 Pebit I Equipment Pr $szow 1. To cash Creplace a moterm equipment) $5201 $292500 2925 Building B - To cash c completed an addition to a building