Question

Walberg Associates, antique dealers, purchased the contents of an estate for \(75,000. Terms of the purchase were FOB shipping point, and the cost of transporting the goods to Walberg Associates’s warehouse was \)2,400. Walberg Associates insured the shipment at a cost of \(300. Prior to putting the goods up for sale, they cleaned and refurbished them at a cost of \)980. Determine the cost of the inventory acquired from the estate.

Short answer

The cost of inventory acquired by the business equals$78,680.

Step-by-step solution

Definition of Insurance

Insurance can be defined as the agreement between a customer and insurance company under which the insurance company promises the customer to protect from financial losses against some of the specified events. The customer is required to pay an insurance premium against such protection.

Cost of Inventory Acquired

Particular	Amount $
Cost of Estate	$75,000
Add: Cost of transportation	2,400
Add: Insurance	300
Add: Cost of cleaning	980
Cost of inventory acquired	$78,680