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    Amount to be capitalized as the cost of the machine

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    Denny Corporation purchased a new machine on October 31, 2004. A $1,400 down payment was made and three monthly installments of $4,200 each are to be made beginning on November 30, 2004. The cash price that would have been paid was $12,800. Denny paid no installation charges under the monthly payment plan but a $200 installation charge would have been incurred with a cash purchase. The amount to be capitalized as the cost of the machine on October 31, 2004 would be
    A. $14,200.
    B. $14,000.
    C. $13,000.
    D. $12,800.

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    Solution Preview

    Denny Corporation purchased a new machine on October 31, 2004. A $1,400 down payment was made and three monthly installments of $4,200 ...

    Solution Summary

    This provides the steps to calculate the amount to be capitalized as the cost of the machine.

    $2.19

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