If the shipping terms are FOB shipping point and the freight bill is $200, the purchaser, using a periodic inventory system would record payment of the freight with a debit to:
A)Inventory and credit to Cash for $200.
B)Freight In and a credit to Cash for $200.
C)Inventory and credit to Purchases Discounts for $200.
D)Purchases Discounts and credit to Inventory for $200.

Question

Quizplus · Accepted Answer

Under FOB shipping point terms, the buyer is responsible for the freight costs from the shipping point to their location. Therefore, the purchaser records the freight cost as "Freight In" (or Transportation-In), which is considered part of the cost of purchasing inventory. This cost is debited to the Freight In account and credited to Cash, reflecting the payment of the freight bill.

If the Shipping Terms Are FOB Shipping Point and the Freight