Worthington Chandler Company purchased equipment for $12,000. Sales tax on the purchase was $800. Other costs incurred were freight charges of $200, repairs of $350 for damage during installation, and installation costs of $225.

What is the cost of the equipment?

a. $12,000b. $12,800c. $13,225d. $13,575

d. $13,575

Explanation:

The cost of the equipment includes all the cost incurred to bring the equipment to a state where it becomes available for use.

These costs are the cost of the equipment, sales tax, freight, repairs during installation and installation cost.

Therefore,

Cost of the equipment = $12,000 + $800 + $200 + $350 + $225

= $13,575

The right option is d. $13,575.