If the shipping terms are FOB shipping point and the freight bill is $200, the purchaser, using a perpetual inventory system would record payment of the freight with a debit to:
A)Inventory and credit to Cash for $200.
B)Accounts Payable and credit to Inventory 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 takes ownership of the goods once they are shipped, and is responsible for the freight charges. Therefore, the purchaser would record the freight cost as an addition to inventory cost, debiting Inventory and crediting Cash.

If the Shipping Terms Are FOB Shipping Point and the Freight