Anchor Company purchased a manufacturing machine with a list price of $160,000 and received a 2% cash discount on the purchase.The machine was delivered under terms FOB shipping point,and transportation costs amounted to $2,400.Anchor paid $3,000 to have the machine installed and tested.Insurance costs to protect the asset from fire and theft amounted to $3,600 for the first year of operations.What is the cost of the machine?
A)$156,800
B)$159,200
C)$165,800
D)$162,200

Question

Quizplus · Accepted Answer

Cost of machine = List price of $160,000 -Cash discount of $3,200 ($160,000 × 2% discount)+ Freight costs of $2,400 + Installation and testing costs of $3,000 = $162,200 The insurance cost is not included in the cost of the machine;it is expensed.

Anchor Company Purchased a Manufacturing Machine with a List Price