Martinelli Company recently purchased a truck.The price negotiated with the dealer was $85,000.Martinelli also paid sales tax of $6,000 on the purchase,shipping and preparation costs of $950,and insurance for the first year of operation of $2,000.For the truck,what amount should be debited to the asset account Vehicles?
A)$85,000
B)$85,950
C)$91,000
D)$91,950

Question

Quizplus · Accepted Answer

The asset account Vehicles should include all costs necessary to acquire the asset and prepare it for use. This includes the purchase price, sales tax, and shipping/preparation costs. Therefore, $85,000 + $6,000 + $950 = $91,950. Insurance is not included as it is an operational cost.

Martinelli Company Recently Purchased a Truck