Question

Horner Company buys a delivery van with a list price of $70,000. The dealer grants a 15% reduction in list price and an additional 2% cash discount on the net price if payment is made in 30 days. Sales taxes amount to $930 and the company paid an extra $700 to have a special device installed. What should be the recorded cost of the van?

a. $58,310.
b. $59,907.
c. $59,940.
d. $59,240.

Answer 1

c. $59,940.

Step-by-step explanation:

The computation of the recorded cost of the van is shown below:

= Net price - net price × cash discount + sales tax + extra amount paid for special device installed

where,

Net price = $70,000 - $70,000 × 15%

= $70,000 - $10,500

= $59,500

And, the other items values would remain the same

Now put these values to the above formula

So, the value would be equal to

= $59,500 - $59,500 × 2% + $930 + $700

= $59,500 - $1,190 + $930 + $700

= $59,940