Question

Grab Manufacturing Co. purchased a 10-ton draw press at a cost of $180,000 with terms of 5/15, n/45. Payment was made within the discount period. Shipping costs were $4,600, which included $200 for insurance in transit. Installation costs totaled $12,000, which included $4,000 for taking out a section of a wall and rebuilding it because the press was too large for the doorway. The capitalized cost of the 10-ton draw press is:
A. $171,000.
B. $183,600.
C. $187,600.
D. $185,760.

Answer 1

Answer:

The capitalized cost = $187,600

so correct option is C. $187,600

Explanation:

given data

cost = $180,000

terms of 5/15, n/45

Shipping costs = $4,600

insurance in transit = $200

Installation costs = $12,000

wall and rebuilding = $4,000

to find out

The capitalized cost of the 10-ton draw press is

solution

we get here The capitalized cost that is express as

The capitalized cost =  Purchase price + Shipping Costs + Installation costs   ......................1

so here  Purchase price is = $180,000 × ( 100% - 5% )

so that

The capitalized cost = ($180,000 × 95%) + $4,600 + $12,000  

The capitalized cost = $187,600

so correct option is C. $187,600