In a periodic inventory system, the entry to record the payment of shipping costs by the company buying the merchandise when the terms are FOB shipping point would include a:
A)debit to Freight In.
B)debit to Delivery Expense.
C)credit to Cost of Goods Sold.
D)credit to Freight Out.

Question

Quizplus · Accepted Answer

A debit to Freight In is correct because in a periodic inventory system, shipping costs on purchases (when terms are FOB shipping point) are considered part of the cost of acquiring the inventory and are therefore added to the inventory cost.

In a Periodic Inventory System, the Entry to Record the Payment