Computers For You is a retailer specializing in selling computers and related equipment.During 2015, Computers For You sells $200,000 of merchandise to Sandcastles, Inc.Computers For You incurs $24,000 of freight costs associated with these sales.Which of the following is true regarding how this $24,000 is treated on the financial statements?
A)Computers For You will report the $24,000 as part of merchandise inventory on the statement of financial position.
B)Sandcastles, Inc.will report the $24,000 as part of merchandise inventory on the statement of financial position.
C)Computers For You will report the $24,000 as part of operating expenses on the income statement.
D)Sandcastles, Inc.will report the $24,000 as an accounts receivable on the statement of financial position.

Question

Quizplus · Accepted Answer

The $24,000 freight cost is an expense incurred by Computers For You in the process of selling merchandise, so it is reported as part of operating expenses on the income statement.

Computers for You Is a Retailer Specializing in Selling Computers