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6 September, 20:14

Horner Company buys a delivery van with a list price of $70,000. The dealer grants a 15% reduction in list price and an additional 2% cash discount on the net price if payment is made in 30 days. Sales taxes amount to $930 and the company paid an extra $700 to have a special device installed. What should be the recorded cost of the van?

a. $58,310.

b. $59,907.

c. $59,940.

d. $59,240.

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  1. 7 September, 00:02
    0
    c. $59,940.

    Explanation:

    The computation of the recorded cost of the van is shown below:

    = Net price - net price * cash discount + sales tax + extra amount paid for special device installed

    where,

    Net price = $70,000 - $70,000 * 15%

    = $70,000 - $10,500

    = $59,500

    And, the other items values would remain the same

    Now put these values to the above formula

    So, the value would be equal to

    = $59,500 - $59,500 * 2% + $930 + $700

    = $59,500 - $1,190 + $930 + $700

    = $59,940
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