Question

9. Zeta Automotive ordered transmissions from the Alpha Transmission Company on May 7, 1990. The terms of sale were FOB destination. The Alpha Company shipped the transmissions on May 22, 1990, and Zeta Automotive received them on June 1, 1990. When should Zeta Automotive record the account payable?

Answer 1

June 1, 1990

Step-by-step explanation:

FOB Destination stands for free on board destination.

Simply, it means that the goods in transit will be considered as the seller's responsibility until reached the buyer's destination.

Seller will bear all the liability until the order is delivered at buyer's destination.

Hence, Zeta Automotive (Buyer) will record the account payable only when the order is received on the June 1, 1990