Granite Company purchased a machine costing $120,000,terms 1/10,n/30.The machine was shipped FOB shipping point and freight charges were $2,000.The machine requires special mounting and wiring connections costing $10,000.When installing the machine,$1,300 in damages occurred.Compute the cost recorded for this machine assuming Granite paid within the discount period.
A)$129,800.
B)$132,100.
C)$130,800.
D)$118,800.
E)$120,100.

Question

Quizplus · Accepted Answer

The cost recorded for this machine can be computed as follows:

Cost of the machine = $120,000 + $2,000 (freight) + $10,000 (special mounting and wiring connections) + $1,300 (damages) = $133,300

Less: Discount (1% of $120,000) = $1,200

Cost recorded for the machine (assuming Granite paid within discount period) = $133,300 - $1,200 = $132,100

Therefore, the correct choice is C.

Granite Company Purchased a Machine Costing $120,000,terms 1/10,n/30