Question

Granite Company purchased a machine costing $121,000, terms 2/10, n/30. The machine was shipped FOB shipping point and freight charges were $2,100. The machine requires special mounting and wiring connections costing $10,100. When installing the machine, $1,600 in damages occurred. Compute the cost recorded for this machine assuming Granite paid within the discount period.

Answer 1

Answer:

$130,780

Explanation:

Given:

Cost of machine purchased = $121,000

Freight charges = $2,100

Special mounting and wiring connections cost = $10,100

Damages = $1,600

Now,

Price of the machine after discount = Purchasing cost × (1 - Discount rate)

= $121,000 × ( 1 - 0.02)

= $118,580

Therefore,

The total cost of the machine recorded

= Price of the machine after discount + Freight charges + Special mounting and wiring connections cost

= $118,580 + $2,100 + $10,100

= $130,780