Rizio Co. purchases a machine for $14,900, terms 2/10, n/60, FOB shipping point.

Question

Rizio Co. purchases a machine for $14,900, terms 2/10, n/60, FOB shipping point. The seller prepaid the $337 freight charges, adding the amount to the invoice and bringing its total to $15,237. The machine requires special steel mounting and power connections costing $1,030. Another $486 is paid to assemble the machine and get it into operation. In moving the machine to its steel mounting, $365 in damages occurred. Materials costing $40 are used in adjusting the machine to produce a satisfactory product. The adjustments are normal for this machine and are not the result of the damages. Complete the below table to calculate the cost recorded for this machine. (Rizio pays for this machine within the cash discount period.)

Explanation / Answer

Answer

invoice price 14900 less ; discount 298 net purchase price 14602 assembly cost 486 freight charges 337 material used in adjusting 40 mounting and power connections 1030 total cost to be recorded 16495

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