Under the perpetual inventory system, the journal entry to record the freight paid by the seller on goods sold is:
A) $$\begin{array} { | l | l | l | }
\hline \text { Accounts Receivable } & XX & \
\hline \text { Freight Out } & & XX \
\hline \text { Sales Revenue } & &XX \
\hline
\end{array}$$
B) $$\begin{array} { | l | r | r | }
\hline \text { Delivery Expenses } & \chi \chi & \
\hline \text { Cash } & & \chi \chi \
\hline
\end{array}$$
C) $$\begin{array} { | l | r | r | }
\hline \text { Cost of Goods Sold } & \chi \chi & \
\hline \text { Cash } & & \chi \chi \
\hline
\end{array}$$
D) $$\begin{array} { | c | r | r | }
\hline \text { Merchandise Inventory } & \chi \chi & \
\hline \text { Cash } & & \chi \chi \
\hline
\end{array}$$

Question

Under the perpetual inventory system, the journal entry to record the freight paid by the seller on goods sold is:
A) $$\begin{array} { | l | l | l | } 
\hline \text { Accounts Receivable } & XX & \
\hline \text { Freight Out } & & XX \
\hline \text { Sales Revenue } & &XX \
\hline
\end{array}$$
B) $$\begin{array} { | l | r | r | } 
\hline \text { Delivery Expenses } & \chi \chi & \
\hline \text { Cash } & & \chi \chi \
\hline
\end{array}$$
C) $$\begin{array} { | l | r | r | } 
\hline \text { Cost of Goods Sold } & \chi \chi & \
\hline \text { Cash } & & \chi \chi \
\hline
\end{array}$$
D) $$\begin{array} { | c | r | r | } 
\hline \text { Merchandise Inventory } & \chi \chi & \
\hline \text { Cash } & & \chi \chi \
\hline
\end{array}$$

Quizplus · Accepted Answer

Freight paid by the seller on goods sold is considered a delivery expense or selling expense, not part of the cost of goods sold or inventory. Therefore, it is recorded as an expense (Delivery Expenses) and a decrease in cash.

Under the Perpetual Inventory System, the Journal Entry to Record