Dan Company Recently Acquired Two Items of Equipment

question 15

Multiple Choice

Dan Company recently acquired two items of equipment.The transactions are described below: June 10:
Acquired a press at an invoice price of $6,500,subject to a 2% cash discount which was taken.Costs of freight and insurance during shipment were $205.Installation costs were $350.
November 12:
Acquired a welding machine at an invoice price of $4,000,subject to a 4% cash discount which was NOT taken.Additional welding supplies were acquired at a total cost of $300.
The increase in the equipment account as a result of the above transactions would be

• A) $10,525
• B) $10,720
• C) $10,925
• D) $11,225

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Definitions:

Credit Sales

Transactions involving the transfer of goods or services to a customer with the agreement that payment will be made at a later date.

Uncollectible Accounts

Debts owed to a company that are considered unlikely to be paid by the debtor, often resulting in a write-off for the creditor.

Adjusting Entry

Journal entries made in accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Percentage of Sales Method

A financial forecasting model that bases future variables, like expenses and income, on a percentage of sales.