Q5-27RQ
Question
What account is debited when recording the payment of freight when using the periodic inventory system?
Step-by-Step Solution
Verified Answer
Freight-in account is debited when recording freight payments while using the periodic inventory system.
1Meaning of Freight-in
Freight-in denotes the transportation or shipping cost incurred by a business to bring the goods into the business. Freight-in is considered a direct expense for the business entities and is added to the net cost of inventory.
2Recording of freight-in payment
Freight-in payments are recorded by the business entities in their books of accounts by debiting the freight-in account.
Journal entry to record the freight-in payment is as follows:
Date | Accounts and Explanation | Debit ($) | Credit ($) |
| Freight-in | XXX |
|
| Cash |
| XXX |
| (To record the payment of freight-in) |
|
|
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