Schrock Company purchases a new delivery van for $70,000.The sales taxes are $5,250.The logo of the company is painted on the side of the van for $1,400.The van's annual license is $140.The van undergoes safety testing for $250.What does Schrock record as the cost of the new van?
A)$77,040
B)$76,900
C)$75,250
D)$76,650

Question

Quizplus · Accepted Answer

The cost of the van includes the purchase price, sales taxes, and costs necessary to prepare the van for use, such as painting the logo and safety testing. Therefore, the cost is $70,000 + $5,250 + $1,400 + $250 = $76,900. The annual license fee is not included in the cost of the van.

Schrock Company Purchases a New Delivery Van for $70,000