Question

Carla Vista Co. purchased machinery on January 1 at a list price of $340000, with credit terms 3/10, n/30. Payment was made within the discount period. Carla Vista paid $35750 sales tax on the machinery and paid installation charges of $5800. Prior to installation, Carla Vista paid $10000 to pour a concrete slab on which to place the machinery. What is the total cost of the new machinery?

Answer 1

$381,350

Step-by-step explanation:

Given that,

List price of machinery = $340,000

Discount = 3%

Sales tax paid on machinery = $35,750

Installation charges paid on machinery = $5,800

Amount paid to pour a concrete slab = $10,000

Firstly, the gross purchasing cost of machinery is determined. It is the cost of the machinery after deducting the discount from the listed price.

It is calculated as follows:

= Listed price - Discount value

= $340,000 - ($340,000 × 0.03)

= $340,000 - $10,200

= $329,800

Therefore, the total cost of the new machinery includes all of the expenses that are incurred to purchase, install and to setup the machinery.

Total cost of the new machinery:

= Gross purchasing cost of machinery + Sales tax on the machinery + Installation charges + Concrete slab

= $329,800 + $35,750 + $5,800 + $10,000

= $381,350