Wiley Company purchased new equipment for $60,000. Wiley paid cash for the equipment. Other costs associated with the equipment were: transportation costs, $1,000; sales tax paid $3,000; and installation cost, $2,500. The cost recorded for the equipment was:

A. $60,000

B. $61,000

C. $64,000

D. $66,500

The cost recorded for the equipment=$66,500

Explanation:

When dealing with the total cost of an equipment we take the purchase cost and other additional associated costs that come with the equipment. This can be expressed as;

T=P+A

where;

T=total cost

P=purchase cost

A=additional costs (transportation cost+sales tax+installation cost)

In our case;

T=unknown

P=$60,000

A = (1,000+3,000+2,500) = $6,500

replacing;

T=60,000+6,500=66,500

The total cost=$66,500

The cost recorded for the equipment=$66,500