Question

Rizio Co. purchases a machine for $13,900, terms 1/10, n/60, FOB shipping point. Rizio paid within the discount period and took the $139 discount. Transportation costs of $314 were paid by Rizio. The machine required mounting and power connections costing $961. Another $453 is paid to assemble the machine and $40 of materials are used to get it into operation. During installation, the machine was damaged and $315 worth of repairs were made points Complete the below table to calculate the cost recorded for this machine. eBook Amount Included in Cost of Equipment: Invoice price of machine Hint Net purchase price Print Total cost to be recorded

Answer 1

Solution:

Total Cost to be recorded is $ 15,529

Calculation:

Amount Included in Cost of Equipment:
Invoice price of machine	$        13,900
Less: Discount	$           (139)
Net Purchase Price	$        13,761
Transportation Costs	$              314
Mounting &Power Connections	$              961
Assembling Cost	$              453
Materials Cost	$                40
Total Cost to be recorded	$        15,529

Notes:

1) Cost of equipment includes every cost which has been incurred from the point of purchase to installation of equipment.

2) Here Rizio Co. incurred cost in relating damages repair of $ 315 but this cost is not an reasonable expenditure which makes the equipment or machine ready for intended use. So, It is not added to equipment cost.