Typewritten answers only, please. No handwritten answers. Southwest Milling Co.
ID: 2340232 • Letter: T
Question
Typewritten answers only, please. No handwritten answers.
Southwest Milling Co. purchased a front-end loader to move stacks of lumber. The loader had a list price of $122,080. The seller agreed to allow a 4.50 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Freight cost amounted to $2,700. Southwest Milling had to hire a specialist to calibrate the loader. The specialist’s fee was $810. The loader operator is paid an annual salary of $5,020. The cost of the company’s theft insurance policy increased by $1,950 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $9,800.
Required
Determine the amount to be capitalized in the asset account for the purchase of the front-end loader. (Round your answers to the nearest whole dollar. Amounts to be deducted should be indicated with minus sign.)
Typewritten answers only, please. No handwritten answers.
Costs that are to be capitalized: List price Total costsExplanation / Answer
Costs that are to be capitalized
List price 122,080
Discount(4.50%) - 5,494
Freight cost 2,700
Specialist's fee. 810
Total costs 120,096
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