Question

Worthington Chandler Company purchased equipment for $40,000. Sales tax on the purchase was $2,400. Other costs incurred were freight charges of $600, repairs of $350 for damage during installation, and installation costs of $675. What is the cost of the equipment?

Answer 1

The cost of the equipment is calculated by adding the purchase price, sales tax, freight charges, and installation costs, which totals to $43,675. Repairs due to damage during installation are not included in this calculation.

Step-by-step explanation:

To calculate the cost of the equipment, we must include the purchase price, sales tax, freight charges, and installation costs, but exclude any repair costs, as these are typically not capitalized. According to these criteria, the calculation would be:

• Purchase price: $40,000
• Sales tax: $2,400
• Freight charges: $600
• Installation costs: $675

We add these amounts together to find the total cost:

$40,000 (purchase price) + $2,400 (sales tax) + $600 (freight) + $675 (installation) = $43,675

Therefore, the cost of the equipment is $43,675.

Answer 2

cost of the equipment = $43,350

Step-by-step explanation:

Given that,

Equipment purchased = $40,000

Sales tax on purchase = $2,400

Freight charges = $600

Installation cost = $350

Total cost of the equipment:

= Equipment purchased + Sales tax on purchase + Freight charges + Installation cost

= $40,000 + $2,400 + $600 + $350

= $43,350

so,

cost of the equipment = $43,350