MrDennis Purchased a Machine for Use in His Business What Is the Amount of Mr

question 79

Multiple Choice

Mr.Dennis purchased a machine for use in his business.Mr.Dennis' costs in connection with this purchase were as follows: $$\begin{array} { | l | r | } \hline \text { Note to seller } & \$ 33,000 \\\hline \text { Cash paid to seller } & 5,000 \\\hline \text { State sales tax } & 2,400 \\\hline \text { Freight to place of business } & 1,500 \\\hline \text { Wages paid to workers to install } & \\\text { machine } & 4,200 \\\hline\end{array}$$ What is the amount of Mr.Dennis' basis in the machine?

• A)$33,000
• B)$40,400
• C)$41,900
• D)$46,100

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Definitions:

Period Cost

Costs that are not directly tied to the production of goods and are expensed in the period they are incurred.

Financial Accounting

The practice of recording, summarizing, and reporting the myriad of transactions resulting from business operations over a period of time.

Managerial Accounting

The practice of analyzing, presenting, and interpreting financial data to help managers make informed business decisions.

Economic Events

Transactions and occurrences that affect the financial position of a business, including sales, purchases, and investments.