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6 July, 11:18

Grab Manufacturing Co. purchased a 10-ton draw press at a cost of $180,000 with terms of 5/15, n/45. Payment was made within the discount period. Shipping costs were $4,600, which included $200 for insurance in transit. Installation costs totaled $12,000, which included $4,000 for taking out a section of a wall and rebuilding it because the press was too large for the doorway. The capitalized cost of the 10-ton draw press is:

A. $171,000.

B. $183,600.

C. $187,600.

D. $185,760.

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Answers (1)
  1. 6 July, 12:57
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    The capitalized cost = $187,600

    so correct option is C. $187,600

    Explanation:

    given data

    cost = $180,000

    terms of 5/15, n/45

    Shipping costs = $4,600

    insurance in transit = $200

    Installation costs = $12,000

    wall and rebuilding = $4,000

    to find out

    The capitalized cost of the 10-ton draw press is

    solution

    we get here The capitalized cost that is express as

    The capitalized cost = Purchase price + Shipping Costs + Installation costs ... 1

    so here Purchase price is = $180,000 * (100% - 5%)

    so that

    The capitalized cost = ($180,000 * 95%) + $4,600 + $12,000

    The capitalized cost = $187,600

    so correct option is C. $187,600
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