Question

Yocum Company purchased equipment on January 1 at a list price of $120,000, with credit terms 2/10, n/30. Payment was made within the discount period and Yocum was given a $2,400 cash discount. Yocum paid $6,000 sales tax on the equipment, and paid installation charges of $1,760. Prior to installation, Yocum paid $4,000 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment?

a. $125,360
b. $129,360
c. $131,760
d. $123,600

Answer 1

Answer:

b. $129,360

Explanation:

The total cost of the new equipment is given by the sum of the actual cost of the equipment (minus the cash discount) to the various incurred costs to the purchase and installation of the equipment (taxes, installation cost and concrete expense).

The total cost is:

$C = (\ 120,000-\ 2,400) +\ 6,000+\ 1,760+\ 4,000\\C=\ 129,360$

The correct answer is b. $129,360