Rizio Co. purchases a machine for $14,800, terms t/10, n/60, FOB shipping point.

Question

Rizio Co. purchases a machine for $14,800, terms t/10, n/60, FOB shipping point. The seller prepaid the $334 freight charges, adding the amount to the invoice and bringing its total to $15,134. The machine requires special steel power connections costing $1,023. Another $48 machine to its steel mounting, $275 a satisfactory product. The adjustments are normal for this machine and are not the result of the damages. mounting and 2 is paid to assemble the machine and get it into operation. In moving the in damages occurred. Materials costing $40 are used in adjusting the machine to produce mplete the below table to calculate the cost recorded for this machine. (Rizlo pays for this machine within the cash discount period.) Amount Included in Cost of Equipment: Invoice price of machine Net purchase price Total cost to be recorded

Explanation / Answer

Answer

Cost of equipment:

Particulars Amount Invoice price of machine $14800 Less: Discount(14800*1%) ($148) Net Purchase price $14652 Assembly cost $482 Freight charges $334 Material used in adjusting $40 Mounting and power connections $1023 Total cost to be recorded $16531

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