JB purchased a machine that had a list price of $70,000. JB paid $10,000 cash and signed a one-year non-interest-bearing note for $60,000. In addition, Baker paid 2 percent provincial sales tax on the list price, transportation costs of $150, and installation costs of $200. The going rate of interest is 12 percent. JB Company should record the cost of the machine as (rounded to the nearest dollar):

Question

Quizplus · Accepted Answer

The cost of the machine should include the cash paid, the present value of the note payable (since it's a non-interest-bearing note, the interest component is implicit in the note's face value and should be discounted back at the going rate of interest), the sales tax, transportation costs, and installation costs. The correct calculation involves finding the present value of the $60,000 note, which is not directly provided in the options, but the total cost certainly exceeds the highest value given, considering all the additional costs on top of the cash paid.

JB Purchased a Machine That Had a List Price of $70,000