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27 September, 08:30

On July 1, 2016, Alpha Company negotiated the purchase of a new piece of equipment with the seller Zulu Company. The equipment was list for $200,000. Smooth talking Alpha was able to negotiate the purchase price and acquired the equipment at $175,000. Alpha Company completed the purchase transaction on July 1. Additionally, Alpha was entitled to a 1% discount if it paid for the equipment within 10 days. After completing the purchase, Bravo Company, third party, offered Alpha, $185,000 for this equipment. What amount should Alpha Company record the equipment purchase at if payment is made by July 11?

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  1. 27 September, 08:37
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    Purchase = $173,250

    Explanation:

    Giving the following information:

    The equipment was list for $200,000. Smooth-talking Alpha was able to negotiate the purchase price and acquired the equipment at $175,000. Alpha Company completed the purchase transaction on July 1. Additionally, Alpha was entitled to a 1% discount if it paid for the equipment within 10 days.

    The purchase price includes the selling price minus any discounts and adding any freight and installation needed.

    Purchase = 175000*0.99 = $173250
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