Question

Boone Company purchased a piece of machinery by paying $18,000 cash. In addition to the purchase price, the company incurred $800 freight charges. The machine has an estimated useful life of 5 years and will require $600 for insurance over that period. Boone Company would record the cost of the machine at

Answer 1

The correct answer is $18920.

Step-by-step explanation:

Boone Company purchased a piece of machinery by paying $18,000 cash.

In addition to the purchase price, the company incurred $800 freight charges.

Estimated useful life of the machine is 5 years and will require $600 for insurance over that period.

So insurance money for a year = $ (
`(600)/(5)` ) = $120.

Boone Company would record the cost of the machine at $ ( 18000+ 800+ 120) = $ 18920.