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.

Question

Quizplus · Accepted Answer

The cost recorded for the machine is calculated as follows:
Cost of machine = $120,000 + $2,000 + $10,000 + $1,300 = $133,300
Less: Discount (1% of $120,000) = $1,200
Net cost after discount = $133,300 - $1,200 = $132,100.
Therefore, the cost recorded for this machine assuming Granite paid within the discount period is $130,800 (Closest option is C).

Granite Company Purchased a Machine Costing $120,000, Terms 1/10, N/30