Anchor Company purchased a manufacturing machine with a list price of $100,000 a
ID: 2571063 • Letter: A
Question
Anchor Company purchased a manufacturing machine with a list price of $100,000 and received a 2% cash discount on the purchase. The machine was delivered under terms FOB shipping point, and freight costs amounted to $5,200. Anchor paid $7,500 to have the machine installed and tested. Insurance costs to protect the asset from fire and theft amounted to $9,800 for the first year of operations. Based on this information, the amount of cost recorded in the asset account would be:
Multiple Choice
$110,700.
$103,200.
$120,500.
$98,000.
Explanation / Answer
List price 100000 Freight costs 5200 Istallation costs 7500 Less: Discount -2000 Total cost 110700 Option 1 is correct