The journal entry to record the purchase on account of $900 of merchandise with freight of $65 prepaid by their supplier and added to the invoice is:
A)debit Accounts Receivable $965; credit Sales $965
B)debit Purchases $900, debit Freight In $65; credit Accounts Payable $965
C)debit Purchases $965; credit Accounts Payable $965
D)debit Accounts Payable $965, credit Freight in $65; credit Purchases $900

Question

Quizplus · Accepted Answer

The purchase of merchandise on account should be recorded as a debit to the Purchases account for $900 and a debit to the Freight In account for $65 (since it was prepaid by the supplier and added to the invoice). The total amount of the invoice is $965, which should be credited to the Accounts Payable account. Therefore, the correct journal entry is debit Purchases $900, debit Freight In $65; credit Accounts Payable $965.

The Journal Entry to Record the Purchase on Account of $900