Grab Manufacturing Co. purchased a ten-ton draw press at a cost of $180,000 with terms of 5/15, n/45. Payment was made within the discount period. Shipping costs were $4,600, which included $200 for insurance in transit. Installation costs totaled $12,000, which included $4,000 for taking out a section of a wall and rebuilding it because the press was too large for the doorway. The capitalized cost of the ten-ton draw press is:
A)$171,000.
B)$183,600.
C)$187,600.
D)$185,760.

Question

Quizplus · Accepted Answer

The capitalized cost of the ten-ton draw press is $187,600. This includes the purchase price of $180,000, the shipping costs of $4,600, and the installation costs of $12,000. The shipping costs include $200 for insurance in transit, and the installation costs include $4,000 for taking out a section of a wall and rebuilding it because the press was too large for the doorway.