Question

Consider the following independent transactions: 1. 2. 3. 4. 5 on January 1, paid, in advance, $5,500 for first and last month's rent. On January 1, paid, in advance, $2,760 for 12 months insurance. Bought a truck to use for delivery purposes for $42,700 and paid for it with $10,000 cash and with a loan from the bank of $32,700 at 8%. The company expects to use the truck for 7 years after which they estimate the residual value will be $3,500. Sold goods worth $28,600 on credit, that had an inventory cost $17,160. Bought $5,000 of inventory on account. What is the total amount of cash paid by the company for the truck?

Answer 1

The total amount of cash paid by the company for the truck is $60,916.

Step-by-step explanation:

To calculate the total amount of cash paid by the company for the truck, we need to consider the cash payment and the loan amount. The cash payment for the truck is $10,000. The loan amount is $32,700 at an interest rate of 8% for 7 years. To calculate the total loan repayment, we can use the formula:

Total loan repayment = Loan amount + (Loan amount * Interest rate * Loan term)

Using this formula, the total loan repayment would be $32,700 + ($32,700 * 0.08 * 7) = $32,700 + $18,216 = $50,916. Therefore, the total amount of cash paid by the company for the truck is $10,000 + $50,916 = $60,916.