Question

Taylor Company buys a delivery van with a list price of $30,000. The dealer grants a 15% reduction in list price and an additional 2% cash discount on the net price if payment is made in 30 days. Sales taxes amount to $400 and the company paid an extra $300 to have a special horn installed. What should be the recorded cost of the van?

Answer 1

The recorded cost of the van should be $26,710.

Step-by-step explanation:

To calculate the recorded cost of the van, we need to consider the various discounts and additional costs. First, calculate the net price after the 15% reduction in the list price. The net price is $30,000 - 15% = $25,500.

Next, calculate the cash discount on the net price. The cash discount is 2% of $25,500, which is $25,500 * 2% = $510.

Then, add the sales taxes of $400 and the cost of the special horn installation of $300 to the net price. The recorded cost of the van is $25,500 + $510 + $400 + $300 = $26,710.