JB Purchased a Machine That Had a List Price of $70,000

question 181

Multiple Choice

JB purchased a machine that had a list price of $70,000. JB paid $10,000 cash and signed a one-year non-interest-bearing note for $60,000. In addition, Baker paid 2 percent provincial sales tax on the list price, transportation costs of $150, and installation costs of $200. The going rate of interest is 12 percent. JB Company should record the cost of the machine as (rounded to the nearest dollar) :

• A) $37,536
• B) $37,936
• C) $41,150
• D) $65,321

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Definitions:

Ending Inventories

The final value of goods available for sale at the end of an accounting period, calculated through physical count or estimation.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material costs and direct labor.

Gross Profit

The income a business earns after subtracting the expenses related to the production and sale of its goods, or the expenses incurred in delivering its services.

Net Income

The total profit of a company after all expenses, including taxes and costs, have been deducted from total revenue.