Kramer, Inc. uses a periodic inventory system. Kramer purchased $1,000 of merchandise on credit, with terms 1/10, n/30, FOB shipping point. The shipping cost of $150 was paid upon receipt of the goods. The journal entry to record the shipping cost includes a credit to Cash and a debit to:
A)Freight Expense
B)Merchandise Inventory
C)Purchases
D)Transportation-In
E)Accounts Payable

Question

Quizplus · Accepted Answer

In a periodic inventory system, the shipping cost is recorded as "Transportation-In" or "Freight-In," which is added to the cost of purchases.