Question

Rizio Co. purchases a machine for $14,900, terms 2/10, n/60, FOB shipping point. Rizio paid within the discount period and took the $298 discount. Transportation costs of $337 were paid by Rizio. The machine required mounting and power connections costing $1,030. Another $486 is paid to assemble the machine and $40 of materials are used to get it into operation. During installation, the machine was damaged and $375 worth of repairs were made. Complete the below table to calculate the cost recorded for this machine. Amount Included in Cost of Equipment: Invoice price of machine Net purchase price Total cost to be recorded

Answer 1

Amount included in cost of Equipment Invoice price of Machine Less: discount Net purchase price Transportation Cost Mounting and power connections Assembly Materials used in adjusting Total cost to be recorded $14,900 $ 298 $14,602 337 1,030 486 $ 40 $16,495 Working Notes: Discount $14,900*2% = $298