BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Capital and revenue expenditures

On August 7, Green River Inflatables Co. paid $1,675 to install a hydraulic lift and $40 for an air filter for one of its delivery trucks. Journalize the entries for the new lift and air filter expenditures.

To determine

Capital expenditure: It refers to the amount spent on acquiring, maintaining, and improving the fixed assets that increases its productivity or extends useful life. It provides benefits in the future period.

Revenue expenditure: It refers to the amount spent on normal maintenance and repairs of fixed assets to generate revenue in the current period. It provides benefits only in the current period.

To journalize: the entry for the capital expenditure incurred for hydraulic lift installation.

To journalize: the entry for the revenue expenditure incurred for installing an air lifter.

Explanation

Record the journal entry for capital expenditure incurred for hydraulic lift installation.

DateAccount Titles and ExplanationPost Ref.Debit ($)Credit ($)
August7Delivery Truck                                                  1,675
     Cash                1,675
(To record the capital expenditure incurred for installation.)

Table (1)

  • Delivery Truck is an asset and is increased due to the amount spent to install the hydraulic lift that improves the delivery truck’s productivity. Therefore, Delivery Truck account is debited with $1,675.
  • Cash is an asset and is decreased due to the expense paid in cash. Therefore, Cash account is credited with $1,675.

Record the journal entry for revenue expenditure incurred for installing an air lifter...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What is the relationship between supply and demand?

Foundations of Business (MindTap Course List)

A life insurance policy is a financial asset, with the premiums paid representing the investments cost. a. How ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Which inventory method always follows the actual physical flow of merchandise?

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

What is natural about natural unemployment?

Economics (MindTap Course List)