Question

Salvia Company recently purchased a truck. The price negotiated with the dealer was $44,500. Salvia also paid sales tax of $2,900 on the purchase, shipping and preparation costs of $3,900, and insurance for the first year of operation of $4,900. At what amount should the truck be recorded on the balance sheet prior to recording depreciation expense

Answer 1

$51,300

Step-by-step explanation:

The computation of the amount of the truck to be recorded before recording the depreciation is shown below:

= Price negotiated + sales tax paid on the purchase + shipping and other cost

= $44,500 + $2,900 + $3,900

= $51,300

We simply added the three items so that the amount of the truck could arrive