Final answer:
option b,The total cost of the machine after accounting for the cash discount, transportation costs, sales tax, and installation costs is $75,820. Routine maintenance costs are not included since they're considered operational expenses.
Step-by-step explanation:
To calculate the cost of the stamping machine purchased by Bartholomew Company, we must consider the purchase price, discounts, and additional costs that add value to the asset. The list price of the machine is $73,000. Since the company paid cash, they received a 5% discount on the machine, which is $3,650 ($73,000 * 0.05). The adjusted cost of the machine after the discount is $69,350 ($73,000 - $3,650).
Other costs associated with the machine that should be included in its cost are transportation costs of $1,600, sales tax of $3,720, and installation costs of $1,150. However, routine maintenance costs are usually considered operational expenses and are not capitalized. Adding these additional costs:
- Transportation Costs: $1,600
- Sales Tax: $3,720
- Installation Costs: $1,150
The total cost of the machine is:
Adjusted Machine Cost: $69,350
Plus:
Transportation Costs: $1,600
Sales Tax: $3,720
Installation Costs: $1,150
Total: $69,350 + $1,600 + $3,720 + $1,150 = $75,820
The correct answer is: b. $75,820.