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Practice Question 03 Corristan Company purchased equipment and incurred these costs: Cash price $24,000 Sales taxes 1,200 Insurance during transit 200 Annual maintenance costs ____400 Total costs $25,800 What amount should be recorded as the cost of the equipment

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Answer:

The cost recorded for the equipment=$25,800

Explanation:

In calculating the total cost of an equipment we take the sum of 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/cash price

A=additional costs(sales tax+insurance+maintenance cost)

In our case;

T=unknown

P=$24,000

A=(1,200+200+400)=$1,800

replacing;

T=24,000+1,800=25,800

The total cost=$25,800

The cost recorded for the equipment=$25,800

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