On August 1, 2014, Mendez Corporation purchased a new machine on a deferred paym

Question

On August 1, 2014, Mendez Corporation purchased a new machine on a deferred payment basis. A down payment of $2,000 was made and 4 annual installments of $12,000 each are to be made beginning on September 1, 2014. The cash equivalent price of the machine was $46,000. Due to an employee strike, Mendez could not install the machine immediately, and thus incurred $600 of storage costs. Costs of installation (excluding the storage costs) amounted to $1,600. The amount to be capitalized as the cost of the machine is

Answer

$52,000.

$47,600.

$46,000.

$48,200.

$52,000.

$47,600.

$46,000.

$48,200.

Explanation / Answer

$47,600.

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