The journal entry to record the purchase on account of $900 of merchandise with freight of $65 prepaid by their supplier and added to the invoice is:
A) debit Purchases $965;credit Accounts Payable $965
B) debit Accounts Payable $965,debit Freight in $65;credit Purchases $900
C) debit Purchases $900,debit Freight In $65;credit Accounts Payable $965
D) debit Accounts Receivable $965;credit Sales $965

Question

Quizplus · Accepted Answer

The journal entry for a purchase on account includes a debit to Purchases for the cost of the merchandise and a separate debit to Freight In for any freight charges prepaid by the supplier and added to the invoice. The total amount due is then credited to Accounts Payable. Therefore, choice C is the correct option. Option A does not account for the prepaid freight and option B debits the wrong account. Option D is not relevant to the transaction as it is a sale, not a purchase.

The Journal Entry to Record the Purchase on Account of $900