The document discusses four transactions - replacing a compressor for $40,000 cash, annual truck tune-ups for $200 each, monthly AC filter replacements for $175, and completing an office building addition for $225,000 cash. It classifies the compressor and office addition as capital expenditures, and the tune-ups and filters as revenue expenses, providing the corresponding journal entries to record the transactions.

1. a.
Paid $40,000 cash to replace a compressor on a refrigeration system that extends its useful life
by four years.
Completed an addition to an office building for $225,000 cash.
Classify the above transactions as either revenue or capital expenditures.
Prepare the journal entries to record transactions a and d
a.
Paid $40,000 cash to replace a compressor on a refrigeration system that extends its useful life
by four years.
b. Paid $200 cash per truck for the cost of their annual tune-ups.
c. Paid $175 for the monthly cost of replacement filters on an air-conditioning system.
d. Completed an addition to an office building for $225,000 cash.
Solution
a) Capital expenditure
b) Revenue expenses
c) Revenue expenses
d) Capital expenditure
Journal entries:
Particulars Debit Credit
a) Refrigeration system 40,000.00
Cash 40,000.00
b) Office building 2,25,000.00
Cash 2,25,000.00