Reference no: EM132421097

Problem: Sonjay Motors recently purchased a new sign to be erected in front of its dealership. The sign company that produced the sign had a standard price for this item at $25,000, but Sonjay was able to negotiate a 20% discount from standard. In addition, the sign company paid $1,200 of freight costs to deliver the sign to Sonjay. Sonjay hired an electrician for $1,300 to wire the new sign's lighting. In addition, Sonjay rented a crane for $800 and paid an installation crew $1,600 to erect the sign. The city required Sonjay to pay a one-time sign inspection fee of $500. Furthermore, Sonjay had to obtain an annual permit at a cost of $50 for the first year. During installation, the crew accidentally damaged an adjoining neighbor's landscaping, and Sonjay paid $750 to clean and repair those problems.

Required:

Question 1: What cost should be allocated to the sign?

Question 2: How much of the costs should be recorded as expense?