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sineoko [7]
3 years ago
7

Your supervisor has come to you with the following list of expenditures for the year and is asking you whether they should be ca

pitalized or expensed as repairs and maintenance. Indicate all of the expenditures that would most appropriately be capitalized.1.Repainted the office building.
2.Added a new wing onto the office building.
3.Took their fleet of cars in for servicing (changing the oil, etc.).
4.Added newer electronic locks on the doors in the production building.
5.Had an engine rebuilt in one of their fleet cars.
Business
2 answers:
ivanzaharov [21]3 years ago
8 0

Answer:

1. Repainted the office building: This should be capitalized.

2. Added a new wing onto the office building: This should be capitalized.

3. Took their fleet of cars in for servicing (changing the oil, etc.).: This should be expensed.

5. Had an engine rebuilt in one of their fleet cars: This should be capitalized.

4. Added newer electronic locks on the doors in the production building: This should be expensed.

Explanation:

1. Repainted the office building: This should be capitalized. This is because repainting is a repair that will restore the physical structure of the office building and significantly improve it. Since it is a capital improvement cost, it should be capitalized and depreciated like other fixed assets.

2. Added a new wing onto the office building: This should be capitalized and depreciated like other fixed assets since it is a capital expenditure that significantly added to the structure of the office building.

3. Took their fleet of cars in for servicing (changing the oil, etc.).: This falls under repair and should be expensed.

4. Added newer electronic locks on the doors in the production building: This should be expensed. Cost of locks and keys are ordinary expenses that do not improve the physical structure of the production building.  

5. Had an engine rebuilt in one of their fleet cars: This should be capitalized. It is a tangible improvement to the fleets of cars and this kind of costs fall under capital expenditures.

GenaCL600 [577]3 years ago
3 0

Answer:

Adding a new wing and rebuilding an engine in one of the cars are expenses which are to be capitalized.

Explanation:

First identify which of the following tasks can be capitalized:

For the office repaint, it can not be capitalized as it is a maintenance cost.

For the addition of new wing to the office, it can be capitalized as it has a life of more than one year.

For the cars taken out for the servicing, the expenditure is already made and thus is not a capitalized expenditure, it is a revenue expenditure.

For addition of newer electronic locks on the doors of the production building, the expenditure is already made and thus it is also a revenue expenditure.

For the engine rebuilt in one of the car is resulting in an asset which has a life of more than 1 year.

So Adding a new wing and rebuilding an engine in one of the cars are expenses which are to be capitalized.

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Use the following information to prepare a multistep income statement and a classified balance sheet for Eller Equipment Co. for
Kryger [21]

Answer:

                                 Eller Equipment Co.

                                  Income statement

Particular                                  Amount($)  Amount ($)

Sales revenue                                                940,000

Less: Cost of good sold                                 <u>(595,000)</u>

Gross margin                                                   345,000

<u>Operating expenses</u>

Salaries expenses                         122,000  

Operating expenses                     65,000  

Warranty expenses                        9,200

Un-collectible account expenses  45,000  

Depreciation expenses                 <u>3,000</u>

Total operating expenses                                <u>(244,200)</u>

Operating income                                              100,800

<u>Non-operating expenses</u>

Interest revenue                            6,200  

Interest expenses                        (36,000)

Gain on sale of equipment            19,000  

Total non-operating items                                   <u>(10,800)</u>

Net Income                                                          <u>$90,000</u>

<u />

                                   Balance Sheet

Assets                                          Amount$

<u>Current Assets</u>                                    

Cash                                                            41,000  

Accounts receivable                  108,000

Less: Allowance for doubtful    (19,000)  89,000

accounts

Merchandise inventory                             101,000  

Interest receivable                                     3600

Prepaid rent                                                38,000  

Supplies                                                      6,500  

Notes receivable                                        <u>32,500</u>

Total current assets                                                           311,600

Property Plant and Equipment    

Equipment                                    243,000  

Less: Accumulated depreciation <u>(66,000)</u>   177,000  

Land                                                                 <u>95,000</u>

Total property plant and equipment                                 <u>272,000</u>

Total Assets                                                                        <u>583,600</u>

Liabilities and Stockholder Equity

<u>Current liabilities</u>

Account payable                     55,000  

Unearned revenue                  47,000  

Warranties payable                  6,500  

Interest payable                        6,000  

Salaries payable                       <u>68,000 </u>

Total current liabilities                                                  182,500

<u>Long-term liabilities</u>  

Notes payable                     160,000

Total long-term liabilities                                               160,000

<u>Stockholders equity</u>

Common stock                            110,000  

Retained earning                         131,100

Total stockholders equity                                              <u>241,100</u>

Total liabilities and stockholders equity                    <u>$583,600</u>

<u>Workings</u>

Retained earning = Beginning retained earning + Net income - Dividend  

= 61,100 + 90,000 - 20,000

= 131,100

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3 years ago
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Nuetrik [128]

Answer:

Influence.

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One of the most important thing for an organization is their workforce or employees.An organization is known by it's employees.So it is necessary to keep the employees happy,and motivated so that they can achieve organization's goals.

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RyanRyan Street Barber Shop pays $ 30$30 per month for water for the first 12 comma 00012,000 gallons and $ 2.50$2.50 per thousa
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This amount is below the quantity for which additional charges accrue. The base charge applies: $30.

<u>13,000</u>

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_____

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A seller sold a house to a buyer allowing the buyer to take over the loan on a "subject to" basis. After 2 years, the buyer defa
lubasha [3.4K]

Answer:

A. The seller would be primarily liable.

Explanation:

Subject to basis is a form of home buying options in real estate. It is a situation where the buyer takes over existing loan of a seller and make commitment to seller to continue repaying the loan to the lender.

Though the buyer will taken over the loan from the seller and make repayment to the lender, there is no legal obligation on buyer`s part that makes him/her liable to the lender. The seller still remain liable despite the the taking over. So  option A is right while B to D is wrong because it`s only the seller that is primarily liable to the lender.

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