Anchor Company purchased a manufacturing machine with a list price of $100,000 a

Question

Anchor Company purchased a manufacturing machine with a list price of $100,000 and received a 2% cash discount on the purchase. The machine was delivered under terms FOB shipping point, and freight costs amounted to $5,200. Anchor paid $7,500 to have the machine installed and tested. Insurance costs to protect the asset from fire and theft amounted to $9,800 for the first year of operations. Based on this information, the amount of cost recorded in the asset account would be:

Multiple Choice

$110,700.

$103,200.

$120,500.

$98,000.

Explanation / Answer

List price 100000 Freight costs 5200 Istallation costs 7500 Less: Discount -2000 Total cost 110700 Option 1 is correct

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