Question

Waterway Industries buys a delivery van with a list price of $60000. The dealer grants a 13% reduction in list price and an additional 1% cash discount on the net price if payment is made in 30 days. Sales taxes amount to $860 and the company paid an extra $760 to have a special device installed. What should be the recorded cost of the van?

Answer 1

Answer:

Cost of the VAN $53.298‬

Explanation:

We have to enter the van as the cost for a cash purchase and all other neccesary cost to get the van ready for use and in company's possesion.

The financing cost (interest) should be excluded as are not part of the cost the company can chose to take them or not.

list x reduction = invoice

invoice  less discount = cash price

60,000 x (1 - 0.13) x (1 - 0.01) = 51.678‬

to this, we add up the sales tax and the extra cost for the device

51,678 + 860 + 760 = 53.298‬