Taylor Company buys a delivery van with a list price of $30,000.The dealer grants a 15% reduction in list price and an additional 2% cash discount on the net price if payment is made in 30 days.Sales taxes amount to $400 and the company paid an extra $300 to have a special horn installed.What should be the recorded cost of the van?

Question

Quizplus · Accepted Answer

15% reduction in list price = $30,000 x 0.15 = $4,500
Net price = $30,000 - $4,500 = $25,500
2% cash discount on net price = $25,500 x 0.02 = $510
Total discount = $4,500 + $510 = $5,010
Subtotal = $25,500 - $5,010 = $20,490
Add sales tax = $20,490 + $400 = $20,890
Add special horn installation = $20,890 + $300 = $21,190
Therefore, the recorded cost of the van should be $25,690.

Taylor Company Buys a Delivery Van with a List Price