Question

Rizio Company purchases a machine for $10,300, terms 1/10, n/60, FOB shipping point. Rizio

paid within the discount period and took the $103 discount. Transportation costs of $233
were paid by Rizio. The machine required mounting and power connections costing $712.
Another $336 is paid to assemble the machine, and $40 of materials are used to get it into
operation. During installation, the machine was damaged and $250 worth of repairs were
made.
Complete the below table to calculate the cost recorded for this machine.
Amount Included in Cost of Equipment:
Invoice price of machine
Net purchase price
recorded
0
0

Answer 1

Amount Included in Cost of Equipment:

Invoice price of machine = $10,300

Less: Discount received = $103

Net purchase price = $10,300 - $103 = $10,197

Additional costs incurred:

Transportation costs = $233

Mounting and power connections = $712

Assembling cost = $336

Materials cost = $40

Repair cost = $250

Total additional costs = $233 + $712 + $336 + $40 + $250 = $1,571

Cost recorded for this machine:

Net purchase price + Total additional costs = $10,197 + $1,571 = $11,768

Therefore, the cost recorded for this machine is $11,768.