The journal entry to record the purchase of merchandise on account for $2,750 with freight of $125 prepaid by their supplier and added to the invoice is:
A) debit Purchases $2,750;credit Accounts Payable $2,750
B) debit Accounts Payable $2,875,debit Freight in $125;credit Purchases $2,750
C) debit Purchases $2,750,debit Freight In $125;credit Accounts Payable $2,875
D) debit Accounts Receivable $2,875;credit Sales $2,875

Question

Quizplus · Accepted Answer

The purchase of merchandise on account should include both the cost of the merchandise and the freight cost. Therefore, debit Purchases for $2,750 and Freight In for $125, and credit Accounts Payable for the total amount of $2,875.

The Journal Entry to Record the Purchase of Merchandise on Account