Asked by Matthew Castanon on Jun 17, 2024
Verified
Granite Company purchased a machine costing $120,000,terms 1/10,n/30.The machine was shipped FOB shipping point and freight charges were $2,000.The machine requires special mounting and wiring connections costing $10,000.When installing the machine,$1,300 in damages occurred.Compute the cost recorded for this machine assuming Granite paid within the discount period.
A) $129,800.
B) $132,100.
C) $130,800.
D) $118,800.
E) $120,100.
FOB Shipping Point
A term used in shipping where the buyer is responsible for the goods once they leave the seller's premises.
Freight Charges
The fees incurred for transporting goods from one location to another.
- Ascertain and record the financial obligations incurred during the acquisition and disposal of fixed assets.
Verified Answer
KL
Katrina LumpkinJun 22, 2024
Final Answer :
C
Explanation :
The cost of the machine is:
$120,000 (purchase price)
+ $2,000 (freight charges)
+ $10,000 (special mounting and wiring connections)
+ $1,300 (damages during installation)
= $133,300
Since Granite Company paid within the discount period, they get a 1% discount on the purchase price of the machine:
$120,000 × 0.01 = $1,200 discount
So the cost recorded for this machine is:
$133,300 (total cost)
- $1,200 (discount)
= $132,100
Therefore, the best choice is B.
$120,000 (purchase price)
+ $2,000 (freight charges)
+ $10,000 (special mounting and wiring connections)
+ $1,300 (damages during installation)
= $133,300
Since Granite Company paid within the discount period, they get a 1% discount on the purchase price of the machine:
$120,000 × 0.01 = $1,200 discount
So the cost recorded for this machine is:
$133,300 (total cost)
- $1,200 (discount)
= $132,100
Therefore, the best choice is B.
Learning Objectives
- Ascertain and record the financial obligations incurred during the acquisition and disposal of fixed assets.
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