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Desert Company purchased a machine with a contract price of $100,000 on terms of 2/10, n/30. The company did not take the cash discount. Transportation costs of $2,500 were incurred, as well as installation and testing costs of $3,000. Sales tax was 7% of invoice price. During the installation, uninsured damages of $500 were incurred and paid by Desert. Determine the original cost of the machine and record the journal entry.

Desert Company purchased a machine with a contract price of $100,000 on terms of 2/10, n/30. The company did not take the cash discount. Transportation costs of $2,500 were incurred, as well as installation and testing costs of $3,000. Sales tax was 7% of invoice price. During the installation, uninsured damages of $500 were incurred and paid by Desert. Determine the original cost of the machine and record the journal entry.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Desert Company purchased a machine with a contract price of $100,000 on terms of 2/10, n/30. The company did not take the cash discount. Transportation costs of $2,500 were incurred, as well as installation and testing costs of $3,000. Sales tax was 7% of invoice price. During the installation, uninsured damages of $500 were incurred and paid by Desert. Determine the original cost of the machine and record the journal entry.
Transcribed Image Text:Desert Company purchased a machine with a contract price of $100,000 on terms of 2/10, n/30. The company did not take the cash discount. Transportation costs of $2,500 were incurred, as well as installation and testing costs of $3,000. Sales tax was 7% of invoice price. During the installation, uninsured damages of $500 were incurred and paid by Desert. Determine the original cost of the machine and record the journal entry.
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