ACTBAS2: Introductory Accounting--Part 2 Accounting for Freight Transactions Terms to Remember 3. Destination Point (Buyers Place) 4. Collect 2.

Shipping Point (Sellers Place) 1. Free on Board

F.O.B. Shipping Point

5. Prepaid

F.O.B. Destination Point

4. In the case of insurance, the buyer should be the one applying for insurance. 1. The Freight-Out account is recorded by the seller.

3. The moment the goods are loaded on the ship, the buyer is responsible for the goods. Title to the goods is transferred to the buyer at shipping point.

2. The Buyer should pay the forwarder, but the seller may pay the forwarder in behalf of the buyer. In this case, the buyer has additional liability to the seller.

1. The Freight-In account is debited by the byer. (Responsibility of the goods is vested upon the buyer)

Collect

Prepaid

transaction. transaction.

The Buyer pays the forwarder. This also means that the Buyer credits the cash account for the freight

3. Title to the goods is transferred to the buyer at destination point.

2. It is the seller who should pay the forwarder, but the buyer may pay the forwarder on behalf of the seller.

The seller pays the forwarder. This also means that the seller credits the cash account for the freight

Journal Entries Buyers Books F.O.B. Shipping Point, Collect Cash Freight-In Freight-In Sellers Books - no entry -

F.O.B. Shipping Point, Prepaid Accounts Payable

Accounts Receivable Cash

accounting-for-freight-transactions

ACTBAS2: Introductory Accounting--Part 2 Accounting for Freight Transactions F.O.B. Destination Point, Collect Cash Accounts Payable Freight-Out Freight-Out Cash

F.O.B. Destination Point, Prepaid - no entry -

Accounts Receivable

accounting-for-freight-transactions