Paid $78,000 cash to replace a motor on equipment that extends its useful life by four years. Paid $390 cash per truck for the cost of their annual tune-ups. Paid $312 for the monthly cost of replacement filters on an air-conditioning system. Completed an addition to a building for $438,750 cash. 1. Classify the above transactions as either a revenue expenditure or a capital expenditure. 2. Prepare the journal entries to record transactions a and d.

a. Capital expenditure

b. Revenue expenditure

c. Revenue expenditure

d. Capital expenditure

Explanation:

Capital expenditures are usually huge expenditure on fixed assets such as land or building and they re usually incurred to generate revenue for the business.

Revenue expenditures are usually for short term basis and are operating expenses, that us required to run the business daily.

Based on the above explanation, the answers to the following will be:

a. Paid $78,000 cash to replace a motor on equipment that extends its useful life by four years. - Capital expenditure

b. Paid $390 cash per truck for the cost of their annual tune-ups. - Revenue expenditure

c. Paid $312 for the monthly cost of replacement filters on an air-conditioning system. - Revenue expenditure.

d. Completed an addition to a building for $438,750 cash. - Capital expenditure

Check the attachment for the journal entry

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