Question

In: Accounting

Jackie Fox owns and operates Platinum Transport Co. During the past year, Jackie incurred the following...

Jackie Fox owns and operates Platinum Transport Co. During the past year, Jackie incurred the following costs related to an 18-wheel truck:

Classify each of the costs as a capital expenditure or a revenue expenditure.

Costs Classification
1. Changed engine oil.
2. Installed a television in the sleeping compartment of the truck.
3. Installed a wind deflector on top of the cab to increase fuel mileage.
4. Modified the factory-installed turbo charger with a special-order kit designed to add 50 more horsepower to the engine performance.
5. Replaced a headlight that had burned out.
6. Replaced a shock absorber that had worn out.
7. Replaced fog and cab light bulbs.
8. Replaced the hydraulic brake system that had begun to fail during his latest trip through the Rocky Mountains.
9. Removed the old radio and replaced it with a new communications module.
10. Replaced the old radar detector with a newer model that is fastened to the truck with a locking device that prevents its removal.

Solutions

Expert Solution

Explanation:

1) Capital Expenditure:

Thoes expenditure which are incurred in order to maintain and improve the fixed asset to increase the productivity and useful life.

2) Revenue Expenditure:

Those expense which incurred in order to maintain and repair fixed asset to earn revenue in current period.

Costs Classification
1. Changed engine oil. Revenue
2. Installed a television in the sleeping compartment of the truck. Capital
3. Installed a wind deflector on top of the cab to increase fuel mileage. Capital
4. Modified the factory-installed turbo charger with a special-order kit designed to add 50 more horsepower to the engine performance. Capital
5. Replaced a headlight that had burned out. Revenue
6. Replaced a shock absorber that had worn out. Revenue
7. Replaced fog and cab light bulbs. Revenue
8. Replaced the hydraulic brake system that had begun to fail during his latest trip through the Rocky Mountains. Capital
9. Removed the old radio and replaced it with a new communications module. Capital
10. Replaced the old radar detector with a newer model that is fastened to the truck with a locking Capital

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Kuwait Dental Clinic has incurred the following overhead costs during the past year.
Kuwait Dental Clinic has incurred the following overhead costs during the past year.MonthNumber ofDental testsOverhead costs (Y)MonthNumber ofDental testsOverhead costs (Y)January            9,800173,500July13,000190,200February6,000155,200August9,500171,900March6,800169,100September9,500173,400April7,500170,400October8,700170,800May9,200172,300November14,000195,200June10,200175,900December13,500198,800Required: Use the high-low method,What is the variable overhead costs per one test?What is the total fixed overhead costs of the Clinic?Predict the level of Clinic’s overhead costs that would be incurred during a month when 17,000 tests are taken.A-AnswerB-AnswerC-Answer
Kuwait Dental Clinic has incurred the following overhead costs during the past year. Month Number of...
Kuwait Dental Clinic has incurred the following overhead costs during the past year. Month Number of Dental tests Overhead costs (Y) Month Number of Dental tests Overhead costs (Y) January             9,800 173,500 July 13,000 190,200 February 6,000 155,200 August 9,500 171,900 March 6,800 169,100 September 9,500 173,400 April 7,500 170,400 October 8,700 170,800 May 9,200 172,300 November 14,000 195,200 June 10,200 175,900 December 13,500 198,800 Required: Use the high-low method, What is the variable overhead costs per one test?...
During the past month, the following costs were incurred in the three production departments and two...
During the past month, the following costs were incurred in the three production departments and two service departments of Kim & Co.: Using Department Supplying Department Administration Factory Support Fabrication Assembly Finishing Administration − 0.40 0.30 0.20 0.10 Factory support 0.15 − 0.15 0.15 0.55 Direct cost $ 680,000 $ 1,350,000 $ 1,760,000 $ 288,000 $ 258,000 Required: Allocate service department costs to Fabrication, Assembly, and Finishing using the reciprocal method, and determine the total costs of Fabrication, Assembly, and...
During the past month, the following costs were incurred in the three production departments and two...
During the past month, the following costs were incurred in the three production departments and two service departments of Kim & Co.: Using Department Supplying Department Administration Factory Support Fabrication Assembly Finishing Administration ? 0.40 0.20 0.10 0.30 Factory support 0.10 ? 0.10 0.20 0.60 Direct cost $ 570,000 $ 1,295,000 $ 1,650,000 $ 277,000 $ 247,000 Required: Allocate service department costs to Fabrication, Assembly, and Finishing using the reciprocal method, and determine the total costs of Fabrication, Assembly, and...
During the past month, the following costs were incurred in the three production departments and two...
During the past month, the following costs were incurred in the three production departments and two service departments of Kim & Co.: Using Department Supplying Department Administration Factory Support Fabrication Assembly Finishing Administration − 0.40 0.30 0.20 0.10 Factory support 0.10   −   0.30   0.10 0.50 Direct cost $ 520,000 $ 1,270,000 $ 1,600,000 $ 272,000 $ 242,000 Required: Allocate service department costs to Fabrication, Assembly, and Finishing using the reciprocal method, and determine the total costs of Fabrication, Assembly, and...
1.Following are costs incurred in the past year involved with the opening of a new branch...
1.Following are costs incurred in the past year involved with the opening of a new branch in a company. Use the following information to calculate the total amount that was debited to the land account. Description Amount Fee for Title 300 Architect Fee 3,100 Cash paid for land and old building 80,000 Remova lof building 7,000 Salavage Value of Building Removed 1,000 Purchased machinery 10,000 New building constructed 500,000 Assessment by city for building permit 600 Installation on machinery 1,500...
The following expenses were incurred by a merchandising business during the year.
The following expenses were incurred by a merchandising business during the year. In which expense section of the income statement should each be reported: (a) selling, (b) administrative, or (c) other?Advertising expenseDepreciation expense on store equipmentInsurance expense on office equipmentInterest expense on notes payableRent expense on office buildingSalaries of office personnelSalary of sales managerSales supplies used
The following transactions occurred during March 2021 for the Wainwright Corporation. The company owns and operates...
The following transactions occurred during March 2021 for the Wainwright Corporation. The company owns and operates a wholesale warehouse. Issued 50,000 shares of common stock in exchange for $500,000 in cash. Purchased equipment at a cost of $80,000. $20,000 cash was paid and a notes payable to the seller was signed for the balance owed. Purchased inventory on account at a cost of $152,000. The company uses the perpetual inventory system. Credit sales for the month totaled $220,000. The cost...
The following transactions occurred during March 2018 for the Wainwright Corporation. The company owns and operates...
The following transactions occurred during March 2018 for the Wainwright Corporation. The company owns and operates a wholesale warehouse. Issued 34,000 shares of common stock in exchange for $340,000 in cash. Purchased equipment at a cost of $44,000. $12,000 cash was paid and a note payable was signed for the balance owed. Purchased inventory on account at a cost of $86,000. The company uses the perpetual inventory system. Credit sales for the month totaled $140,000. The cost of the goods...
The following transactions occurred during March 2016 for the Wainwright Corporation. The company owns and operates...
The following transactions occurred during March 2016 for the Wainwright Corporation. The company owns and operates a wholesale warehouse. 1. Issued 44,000 shares of common stock in exchange for $440,000 in cash. 2. Purchased equipment at a cost of $54,000. $17,000 cash was paid and a note payable was signed for the balance owed. 3. Purchased inventory on account at a cost of $106,000. The company uses the perpetual inventory system. 4. Credit sales for the month totaled $190,000. The...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT