Question

Rizio Co. purchases a machine for $12,800, terms 2/10, n/60, FOB shipping point. Rizio paid within the discount period and took the $256 discount. Transportation costs of $289 were paid by Rizio. The machine required mounting and power connections costing $885. Another $417 is paid to assemble the machine and $40 of materials are used to get it into operation During installation, the machine was damaged and $370 worth of repairs were made. Complete the below table to calculate the cost recorded for this machine. Amount Included in Cost of Equipment: Invoice price of machine Net purchase price 0 Total cost to be recorded $ 0

Answer 1

Solution 1:

Invoice price	12800
Less: Discount	-256
Net Purchase price	12544
Transportation cost	289
Mounting and power connections	885
Assembly cost	417
Material used in adjusting	40
Total cost to be recorded	14175

Solution 2:

Transaction	General Journal	Debit	Credit
1	Land	386287
	Building	1774300
	Land Improvements	111999
	Cash		2272586

Working:

Cost of Land
Purchase price of Land	305000
Tear Down Cost of Old building	32800
Cost to Fill and level the lot	48487
Total cost of Land	386287
Cost of Building
Construction cost of new building	1774300
Cost of Land Improvements
Construction cost of parking area	111999