Final answer:
The cost of the truck is the sum of the cash price, sales taxes, motor vehicle license, and painting and lettering, excluding operational costs such as accident insurance. The total cost for the truck is $31,951.
Step-by-step explanation:
The cost of the truck for Ivanhoe Company includes the cash price and additional expenditures that are necessary to acquire and prepare the truck for its intended use.
Hence, these components will be summed up to determine the total cost of the truck:
- Cash price: $30,000
- Sales taxes: $1,350
- Motor vehicle license: $600
- Painting and lettering: $1
Note that the accident insurance cost is not included as it is an operational cost and not a capital cost of acquiring the truck. Therefore, the cost of the truck is calculated as follows:
Total Cost of Truck = Cash price + Sales taxes + Motor vehicle license + Painting and lettering
= $30,000 + $1,350 + $600 + $1
= $31,951