In a perpetual inventory system,if the terms of sale are FOB shipping point the journal entry to record the payment of freight charges on purchased merchandise includes a:
A)debit to Inventory
B)credit to Freight Out
C)credit to Accounts Payable
D)debit to Cost of Goods Sold

Question

Quizplus · Accepted Answer

In a perpetual inventory system, when the terms of sale are FOB shipping point, the buyer is responsible for the freight charges. These charges are considered part of the cost of purchasing inventory. Therefore, the freight charges are debited to Inventory to reflect the increased cost of the inventory being purchased.

In a Perpetual Inventory System,if the Terms of Sale Are