Yocum Company purchased equipment on January 1 at a list price of $120000 with credit terms 2/10 n/30. Payment was made within the discount period and Yocum was given a $2400 cash discount. Yocum paid $6000 sales tax on the equipment and paid installation charges of $1760. Prior to installation Yocum paid $4000 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment?

Question

Quizplus · Accepted Answer

List price of equipment = $120000
Credit terms of 2/10 n/30 means Yocum gets a 2% discount if they pay within 10 days of the invoice date.

The amount of discount is:
Discount = List price × Discount rate = $120000 × 2% = $2400

The net price of the equipment is:
Net price = List price − Discount = $120000 − $2400 = $117600

Sales tax = $6000
Installation charges = $1760
Cost of concrete slab = $4000

Total cost of equipment = Net price + Sales tax + Installation charges + Cost of concrete slab
= $117600 + $6000 + $1760 + $4000
= $129360

Therefore, the total cost of the new equipment is $129360.

Yocum Company Purchased Equipment on January 1 at a List