Exercise $8-17$A $($Algo$)$ Effect of revenue expenditures versus capital expenditures on financial statements LO $8-8$

Sellers Construction Company purchased a compressor for $$119,200$ cash. It had an estimated useful life of four years and a $$11,700$ salvage value. At the beginning of the third year of use, the company spent an additional $$8,830$ related to the equipment. The company$$s financial condition just prior to this expenditure is shown in the following statements model:

Balance Sheet Income Statement Statement of Cash Flows

Assets $=$ Stockholders' Equity

Cash $+$ Book Value of Compressor $=$ Common Stock $+$ Retained Earnings Revenue $$ Expense $=$ Net Income

$13,470+65,450=24,500+54,420$ NA $$ NA $=$ NA NA

Required

Record the $$8,830$ expenditure in the statements model under each of the following independent assumptions:

Note: In the Statement of Cash Flows column, use the initials $"$OA$"$ for operating activities, $"$FA$"$ for financing activities, and $"$IA$"$ for investing activity. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require input.

The expenditure was for routine maintenance.

The expenditure extended the compressor$$s life.

The expenditure improved the compressor$$s operating capacity.