1. On March 1, Bunker Hill Company purchased a new stamping machine with a list price of
$78,000. The company paid cash for the machine; therefore, it was allowed a 5% discount. Other
costs associated with the machine were: transportation costs, $2,100; sales tax paid, $4,720;
installation costs, $1,400; routine maintenance during the first month of operation, $2,000. The
cost recorded for the machine was:
$80,920.
$74,100.
$82,320.
$84,320.
Solution
in $ List Price 78000 Cash Discount @5% 3900 Purchase price 74100 Transportation 2100 Sales
Tax 4720 Installation cost 1400 Cost of Machine 82320 Preinstallation cost are capitalised
Rutine maintainance cost are revenue expenses Answer: $82320