Yocum Company purchased equipment on January 1 at a list price of $120000 with credit terms 2/10 n/30. Payment was made within the discount period and Yocum was given a $2400 cash discount. Yocum paid $6000 sales tax on the equipment and paid installation charges of $1760. Prior to installation Yocum paid $4000 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment?

A) $125360
B) $129360
C) $131760
D) $123600

Question

Crystal Rosas · Accepted Answer

Final Answer : B, Explanation :  List price of equipment = $120000Credit terms of 2/10 n/30 means Yocum gets a 2% discount if they pay within 10 days of the invoice date.The amount of discount is:Discount = List price × Discount rate = $120000 × 2% = $2400The net price of the equipment is:Net price = List price − Discount = $120000 − $2400 = $117600Sales tax = $6000Installation charges = $1760Cost of concrete slab = $4000Total cost of equipment = Net price + Sales tax + Installation charges + Cost of concrete slab= $117600 + $6000 + $1760 + $4000= $129360Therefore, the total cost of the new equipment is $129360.

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