2260 2260 950 125916
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Southwest Milling Co. purchased a front-end loader to move stacks of lumber. The loader had a list price of $115,760. The
seller agreed to allow a 6.00 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping
point. Freight cost amounted to $2,260. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's
fee was $950. The loader operator is paid an annual salary of $6,200. The cost of the company's theft insurance policy
increased by $1,600 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected
salvage value of $8,000.
Required
Determine the amount to be capitalized in the asset account for the purchase of the front-end loader. (Round your
answers to the nearest whole dollar. Amounts to be deducted should be indicated with minus sign.)
Costs that are to be capitalized $115760
List price
Less: Discount
Freight Cost
Specialist fee
Total costs
?????
2260
2260
950
125916
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