Use the following information to answer questions
Jamison Company purchased the assets of Booker Company at an auction for $1,400,000.An independent appraisal of the fair value of the assets is listed below:
-Horner 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

Use the following information to answer questions 
Jamison Company purchased the assets of Booker Company at an auction for $1,400,000.An independent appraisal of the fair value of the assets is listed below: 
-Horner 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?

Quizplus · Accepted Answer

List price of van: $30,000
Reduction in list price: 15%
Net price after reduction: $25,500
Cash discount: 2% of $25,500 = $510
Net price after cash discount: $24,990 ($25,500 - $510)
Add sales taxes: $24,990 + $400 = $25,390
Add cost of special horn: $25,390 + $300 = $25,690
Therefore, the recorded cost of the van should be $25,690.

Use the Following Information to Answer Questions