Dan Company recently acquired two items of equipment.The transactions are described below: June 10:
Acquired a press at an invoice price of $6,500,subject to a 2% cash discount which was taken.Costs of freight and insurance during shipment were $205.Installation costs were $350.
November 12:
Acquired a welding machine at an invoice price of $4,000,subject to a 4% cash discount which was NOT taken.Additional welding supplies were acquired at a total cost of $300.
The increase in the equipment account as a result of the above transactions would be
A) $10,525
B) $10,720
C) $10,925
D) $11,225

Question

Quizplus · Accepted Answer

The press cost is $6,500 - 2% discount ($130) + $205 freight and insurance + $350 installation = $6,925. The welding machine cost is $4,000 (no discount taken). Total increase = $6,925 + $4,000 = $10,925. However, the welding supplies are not included in the equipment account, so the correct total is $10,720.

Dan Company Recently Acquired Two Items of Equipment