Question

Storm Corporation purchased a new machine on October 31, 2020. A $4,800 down payment was made and three monthly installments of $14,400 each are to be made beginning on November 30, 2020. The cash price would have been $46,400. Storm paid no installation charges under the monthly payment plan but an $800 installation charge would have been incurred with a cash purchase. The amount to be capitalized as the cost of the machine on October 31, 2020 would be _____________?

Answer 1

$47,200

Step-by-step explanation:

The computation of the capitalized amount as a cost of machine is shown below:

= Cash price of new machine + monthly installment charges

= $46,400 + $800

= $47,200

Since we have to find out the capitalized amount so we consider the cash price and the monthly installment charges only

All other information which is given is not relevant. Hence, ignored it