Yocum Company purchased equipment on January 1 at a list price of $50,000, with credit terms 2/10, n/30. Payment was made within the discount period and Yocum was given a $1,000 cash discount. Yocum paid $2,500 sales tax on the equipment, and paid installation charges of $880. Prior to installation, Yocum paid $2,000 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment?
A) $52,380
B) $54,380
C) $55,380
D) $50,500

Question

Quizplus · Accepted Answer

List Price of equipment = $50,000
Cash discount = 2% of $50,000 = $1,000
Amount to be paid within the discount period = $50,000 - $1,000 = $49,000

Total cost of equipment without tax and installation charges = List price - Cash discount = $49,000

Sales tax = $2,500
Installation charges = $880
Cost of concrete slab = $2,000

Total cost of new equipment = Cost of equipment without tax and installation charges + Sales tax + Installation charges + Cost of concrete slab
= $49,000 + $2,500 + $880 + $2,000
= $54,380

Therefore, the best choice is B.

Yocum Company Purchased Equipment on January 1 at a List