Angie's Blooms purchased a delivery van for $40,000. The company was given a $4,000 cash discount by the dealer, and paid $2,000 sales tax. Annual insurance on the van is $1,000. As a result of the purchase, by how much will Angie's Blooms increase its van account?

Question

Quizplus · Accepted Answer

The initial cost of the van is $40,000, but the company received a cash discount of $4,000 and paid $2,000 in sales tax. Therefore, the net cost of the van is:
$40,000 - $4,000 + $2,000 = $38,000
In addition, the annual insurance cost of the van is $1,000.
Therefore, the total increase in Angie's Blooms van account is:
$38,000 + $1,000 = $39,000
The correct answer is D.

Angie's Blooms Purchased a Delivery Van for $40,000