Anchor Company purchased a manufacturing machine with a list price of $160,000 and received a 2% cash discount on the purchase.The machine was delivered under terms FOB shipping point,and freight costs amounted to $2,400.Anchor paid $3,000 to have the machine installed and tested.Insurance costs to protect the asset from fire and theft amounted to $3,600 for the first year of operations.Based on this information,the amount of cost recorded in the asset account would be:
A)$156.800.
B)$159,200.
C)$165,800.
D)$162,200.

Question

Quizplus · Accepted Answer

The cost recorded in the asset account would include the purchase price, cash discount, freight costs, installation and testing costs, and insurance costs.

Purchase price: $160,000
Cash discount: $160,000 x 2% = $3,200 (subtracted from purchase price)
Freight costs: $2,400
Installation and testing costs: $3,000
Insurance costs: $3,600

Total cost recorded in the asset account: 
$160,000 - $3,200 + $2,400 + $3,000 + $3,600 = $162,200

Therefore, the correct answer is option D ($162,200).

Anchor Company Purchased a Manufacturing Machine with a List Price