Horner Company buys a delivery van with a list price of $60,000. 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 $800 and the company paid an extra $600 to have a special device installed. What should be the recorded cost of the van?

Question

Quizplus · Accepted Answer

List price of the van = $60,000
15% discount on list price = (15/100) * 60,000 = $9,000
Net price after 15% discount = 60,000 - 9,000 = $51,000

2% cash discount on net price = (2/100) * 51,000 = $1,020
Net price after cash discount = 51,000 - 1,020 = $49,980

Sales tax = $800
Cost of special device installation = $600

Recorded cost of the van = net price after cash discount + sales tax + cost of special device installation
= 49,980 + 800 + 600
= $51,380

Therefore, the correct answer is option C.

Horner Company Buys a Delivery Van with a List Price