Marble Company purchased a machine costing $120,000, terms 1/10, n/30. The machine was shipped FOB shipping point and freight charges were $2,000. The machine requires special mounting and wiring connections costing $10,000. When installing the machine, $1,300 in damages occurred. Materials costing $1,500 are used in testing and adjusting the machine to produce a satisfactory product. Compute the cost recorded for this machine assuming Marble paid within the discount period.

Question

Quizplus · Accepted Answer

The cost recorded for the machine can be calculated as follows:

Purchase price: $120,000
Freight charges: $2,000
Special mounting and wiring connections: $10,000
Less: Discount (1% of $122,000): $1,220
Amount paid within discount period: $120,780
Add: Damages during installation: $1,300
Add: Testing and adjusting materials: $1,500
Total cost recorded: $132,580

Therefore, the best choice is C, as it is the closest option to $132,580.

Marble Company Purchased a Machine Costing $120,000, Terms 1/10, N/30