QS 8-9 Revenue and capital expenditures LO C3 Paid $44,000 cash to replace a motor on equipment that extends its useful life by four years. Paid $220 cash per truck for the cost of their annual tune-ups. Paid $176 for the monthly cost of replacement filters on an air-conditioning system. Completed an addition to a building for $247,500 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.

Requirements Solved

Explanation:

Capital expenditures are typically one-time large purchases of fixed assets that will be used for revenue generation over a longer period. Revenue expenditures are the ongoing operating expenses, which are short-term expenses used to run the daily business operations.

Paid $44,000 cash to replace a motor on equipment that extends its useful life by four years

Nature - Capital expenditure transaction.

DR Equipment    $44,000

CR Cash                     $44,000

Paid $220 per truck for the cost of their annual tune-ups

Nature – Revenue Expenditure transaction

Paid $176 for the monthly cost of replacement filters on an air-conditioning system

Nature - Capital expenditure transaction.

Completed an addition to a building $247,500

Nature - Capital expenditure transaction.

DR Building      $247,500

CR Cash                      $247,500

i would say their habit of breaking down.

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