Martinelli Company recently purchased a truck. The price negotiated with the dealer was $85,000. Martinelli also paid sales tax of $6,000 on the purchase, shipping and preparation costs of $950, and insurance for the first year of operation of $2,000. For the truck, what amount should be debited to the asset account Vehicles?

Question

Quizplus · Accepted Answer

The total cost of the truck is $85,000 + $6,000 + $950 + $2,000 = $93,950. However, the question asks for the amount that should be debited to the asset account Vehicles, which is the cost of the truck excluding sales tax. Therefore, the correct answer is $85,000.

Martinelli Company Recently Purchased a Truck