Principles of Accounting
12th Edition
ISBN: 9781133626985
Author: Belverd E. Needles, Marian Powers, Susan V. Crosson
Publisher: Cengage Learning
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Students have asked these similar questions
Classify the items listed below either as capital or revenue expenditure.
Fittings partition in a new shop;
Carriage on returns outwards;
Cost of weighing machine in a retail shop;
Repairs to office safe;
Legal costs of collecting debts;
Legal costs of building materials for a new office building;
Carriage costs of building materials for a new office building;
Purchase of an extra motor vehicle for distributor of soda and beer;
Cost of paint for repainting the hospital wards from green to blue;
Cost of paying for registration number plates of a new motor vehicle;
Cost of replacing registration number plates of a motor vehicle;
For each of the following items, indicate if it is a Capital Expenditures (CE) or Revenue Expenditure (RE).
1.
Constructed an addition to an existing building.
2.
Repainted the president’s office.
3.
Paid cash for improvements that will increase the number of products that the machine can produce per hour.
4.
Replaced the tires on a company delivery vehicle.
5.
Replaced a component of a machine that will increase the economic life of that machine.
Current Attempt in Progress
Indicate whether each of the following expenditures should be classified as land, land improvements, buildings,
equipment, or none of these.
1. Computer installation cost
2.
3.
4.
5.
6.
7.
8.
9.
10.
Driveway cost
Architect's fee
Surveying costs
Grading costs
Cost of lighting for the parking lot
Insurance while in transit and freight on a computer purchased
Material and labor costs incurred to construct a factory
Cost of tearing down a warehouse on land just purchased
Utility cost during the first year
4
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- Gallon Auto purchased a neighboring lot for a new building and parking lot. Indicate whether each of the following expenditures is properly charged to (a) Land, (b) Land Improvements, or (c) Buildings:a. Paving costsb. Architects’ fee for building designc. Cost of clearing the propertyd. Cost of the propertye. Building construction costsf. Lights around the propertyg. Building permith. Interest on the construction loanarrow_forwardState whether each of the below is Capital Expenditure or Revenue Expenditure. 1 Purchase of new delivery vehicle 2 Payment of an invoice for advertising 3 Costs of clearing the site ready for an extension to the factory building 4 Signwriting on the outside of the new delivery vehicles 5 Redecoration of the office 6 Payment of delivery driver’s wages 7 Fuel for delivery vehicles 8 Fitting of shelving in delivery vehicle 9 Clay for making the pets toys 10 Wages of sales staff 11 Purchase of potters wheel for use in the business 12 Installation costs for the potters wheel 13 Wages os staff operating the potters wheel 14 Redecoration of store room 15 Payment of extra wages to own staff for fitting the alarm and cctv 16 Payment of architect fees for designing the proposed new shop 17 Purchase of new telephones system for…arrow_forwardIdentify the following expenditures as capital expenditures or revenue expenditures:a. Immediately after acquiring a new delivery truck, paid $195 to have the name of the store andother advertising material painted on the vehicle.b. Painted delivery truck at a cost of $450 after two years of use.c. Purchased new battery at a cost of $40 for two-year-old delivery truck.d. Installed an escalator at a cost of $17,500 in a three-story building that had been used for someyears without elevators or escalators.e. Purchased a pencil sharpener at a cost of $15.00. f. Original life of the delivery truck had been estimated at four years, and straight-line deprecia-tion of 25 percent yearly had been recognized. After three years’ use, however, it was decided to recondition the truck thoroughly, including adding a new engine.arrow_forward
- Question Two: Choose the best answer 1. Which of the following capital assets would not be depreciated? a) The city's streetlights. b) Purchased computer software. c) The partially completed city hall. d) The artwork owned and displayed in the city parks. 2. Goods for which a purchase order had been placed at an estimated cos were received at an actual cost of $985. The journal entry in the Gener: record the receipt of the goods will include a: a) Debit to Reserve for Encumbrances for $1,000. b) Credit to Vouchers Payable for $985. c) Debit to Expenditures for $985. d) All of the above are correct. W 直arrow_forwardIndigo Architecture made the following cash expenditures during its first year in operations: 1. 2. 3. 4. 5. 6. 7. 8. 9. (a1) Cost of real estate purchased as a plant site (land and building) Accrued property taxes paid at the time of the purchase of the real estate Cost of demolishing building to make land suitable for construction of a new building Architect's fees on building plans Excavation costs for new building Cost of filling and grading the land Full payment to building contractor Cost of parking lots and driveways Property taxes paid for the current year on the land Your answer is partially correct. $133,900 3,300 10,600 14,700 26,900 2.300 752,600 32,800 8,200 Record the above transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.)arrow_forwardExplain how you would decide whether to record each of the following expenditures as an asset or an expense.Assume all items are material.(a) Legal fees paid in connection with the purchase of land are $1,500.(b) Eduardo, Inc. paves the driveway leading to the office building at a cost of $21,000.(c) A meat market purchases a meat-grinding machine at a cost of $3,500.(d) On June 30, Monroe and Meno, medical doctors, pay 6 months’ office rent to cover the month of July and the next5 months.(e) Smith’s Hardware Company pays $9,000 in wages to laborers for construction on a building to be used in the business.(f) Alvarez’s Florists pays wages of $2,100 for the month to an employee who serves as driver of their delivery truck.arrow_forward
- During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated five machines for $100,000 to improve efficiency in production of their remaining useful life of five years Low-cost repairs throughout the year totaled $70,000 Replaced a broken gear on a machine for $10,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?arrow_forwardC & M Securities made several expenditures during the current fiscal year, including the following:(a)For each of the items listed below, indicate whether the cost should be debited to land, buildings, equipment, land improvements, or an expense account. Amount Description of Expenditure 1. $150,000 Acquisition of a piece of land to be used as a building site No effectEquipmentBuildingExpense or Land improvementsLandExpenseExpense or BuildingsLand improvements 2. 3,000 Demolition of a small building on the land, to make way for the new building Expense or BuildingsNo effectLand improvementsBuildingExpenseEquipmentLandExpense or Land improvements 3. 7,500 Levelling of the land to prepare it for construction of the new building No effectLand improvementsExpense or Land…arrow_forwardIdentify which of the following expenditures is considered as a capital expenditure that must be capitalized (depreciated):(a) Purchase land to build a warehouse at $300,000.(b) Purchased a copy machine at $15,000.(c) Installed a conveyor system at a cost of $55,000 to automate some part of production processes.(d) Painted the office building, both interior and exterior, at a cost of $22,000.( e) Repaved the parking lot at a cost of $25,000.(f) Installed a purified water fountain in the employee lounge at a cost of$3,000.(g) Purchased a spare part for a stamping machine at a cost of $3,800.(h) Paid $12,000 to lease a dump truck for six months.(i) Purchased a patent on an energy-saving device over five years at a cost of $30,000.arrow_forward
- 11. Smith paid the following costs on July 7th in connection with a building. All amounts were paid in cash. New elevator system $200,000 Painting of lobby $20,000 Required: Record the appropriate journal entry(ies).arrow_forwardWhich of the following would be considered capital expenditures (debit to an asset)? Sales tax on the purchase of equipment Purchase of cleaning supplies to clean the company's microwave A special concrete foundation that was poured specifically for a new piece of equipment Installation costs for installing a new piece of equipment General maintenance costs for a piece of equipment that has been in service for ten years Routine oil change for a van Repair of damage incurred on a new piece of equipment while the new equipment was being brought into the company's office Attorney's fees incurred to review the purchase agreement for a new piece of equipment Installation of a parking lot around a retail buildling Freight costs for the delivery of a purchased used printing pressarrow_forwardColumbia Company incurred the following expenditures related to the land and building: Payment for land and old building 1,750,000 Demolition of old building to prepare the land for the construction of a new building 87,500 Payment to tenants for vacating old building 26,250 Building permit for new construction 52,500 Surveying fee before construction of new building 35,000 Parking lots and driveways (part of building plan) 70,000 Cost of grading, leveling and landfill 78,750 Assessment by city for drainage project 8,750 Construction costs of new building 10,500,000 Temporary quarters for…arrow_forward
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