Question

Rizio Co. purchases a machine for $11,600, terms 2/10, n/60, FOB shipping point. The seller prepaid the $262 freight charges, adding the amount to the invoice and bringing its total to $11,862. The machine requires special steel mounting and power connections costing $802. Another $378 is paid to assemble the machine and get it into operation. In moving the machine to its steel mounting, $275 in damages occurred. Materials costing $40 are used in adjusting the machine to produce a satisfactory product. The adjustments are normal for this machine and are not the result of the damages. Complete the below table to calculate the cost recorded for this machine. (Rizio pays for this machine within the cash discount period.)

Answer 1

ANSWER:

Amount included in the cost of equipment	Amount ($)
Invoice price of machine Less: Discount (11600 x 2%)	11600 232
Net purchase price Freight charges Mounting and power connections Assembly Materials used in adjusting	11368 262 802 378 40
Total cost to be recorded	12850