Rizio Co. purchases a machine for $12,500, terms 2/10, n/60, FOB shipping point

Rizio Co. purchases a machine for $12,500, terms 2/10, n/60, FOB shipping point. The seller prepaid the $360 freight charges, adding the amount to the invoice and bringing its total to $12,860. The machine requires special steel mounting and power connections costing $895. Another $475 is paid to assemble the machine and get it into operation. In moving the machine to its steel mounting, $180 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.)

Solutions

Expert Solution

Amount included in cost of equipment:

Invoice price of machine	$12,500
Less: Discount	$250
Net purchase price	$12,250
Assembly	$475
Freight charges	$360
Materials used in adjusting	$40
Mounting and power connections	$895


Total cost to be recorded	$14,020

ekkarill92 answered 2 years ago

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