Respuesta :
Answer and Explanation:
1. Event Nature of expenditure
The capital expenditure is the expenditure which is incurred for one time or we can say it is spent on long term assets. While on the other hand, the revenue expenditure is expenditure which is incurred on frequent basis
Based on this, the treatment is as follows
i. Capital expenditure
ii. Revenue expenditure
iii. Revenue expenditure
iv. Capital expenditure
2. The Journal entry is shown below:-
a. Equipment Dr, $40,000
To Cash $40,000
(Being replacement of compressor is recorded)
Here we debited the equipment as it increased the assets and we credited the cash as it decreased the assets
b. Building Dr, $225,000
To Cash $225,000
Here we debited the equipment as it increased the assets and we credited the cash as it decreased the assets
A journal entry refers to the recording of transactions according to the double-entry system. A general ledger is generally used to record the transactions.
What is an expenditure?
Any type of payment or disbursement of cash that is done to avail the benefits is known as expenditures.
1. Classification of the above transactions
- Paid $40,000 cash to replace a motor of the equipment that extends its useful life by four years is a capital expenditure.
- Paid $200 cash per truck for the cost of their annual tune-ups is a revenue expenditure.
- Paid $175 for the monthly cost of replacement filters on an air-conditioning system is a revenue expenditure.
- Completed an addition to the building for $225,000 cash is a capital expenditure.
2. Preparing journal entry
A) Equipment Dr. $40,000
To Cash $40,000
(To record payment to replace a motor)
D) Building Dr. $225,000
To Cash $225,000
(To record additions to the building)
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