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
When firm finances new investments, then set up accounts payable with suppliers, in which the balance that the firm must supply is called the investment in net "<u>Working</u>" capital.
This is because investment in net <u>working</u> capital is when the capital remains when the current liabilities are removed from the current assets.
The net <u>working</u> capital can be any of the cash, accounts receivable, inventory, and short-term investments or a combination of any of these elements.
The net <u>working</u> capital can be used to pay debts or invest in the growth of the company.
Hence, in this case, it is concluded that the correct answer is "Net Working Capital."
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Answer:
Queen $32,850
Stevens $180,150
Explanation:
Queen Stevens Net Income
available (distributed)
Net Income $213,000
Interest on Capital (6%) $4,500 $6,300 <u>($10,800)</u>
$202,200
Salary Allowance $117,150 <u>($117,150)</u>
$85,050
Remaining $85,050 $28,350 $56,700 ($65,050)
(in ratio 1:2)
Total Net Income $32,850 $180,150 ($0)
distributed
Answer:
the depreciation expense recorded is $680
Explanation:
The computation of the depreciation expense under the straight-line method is shown below:
= (Purchase cost - residual value) ÷ (estimated life)
= ($17,500 - $1,180) ÷ ( 4 years)
= $4,080
Now the 2 months depreciation is i.e. from November to December
= $4,080 × 2 months ÷ 12 months
= $680
Hence, the depreciation expense recorded is $680