Final answer:
To add landed costs to inventory purchases, the correct approach is to use a clearing GL account on both the bill and the inventory adjustment, which transfers landed costs such as freight and duties to the carrying value of the inventory.
Step-by-step explanation:
To add landed costs to inventory purchases, the correct method is Use a clearing GL account on the bill and the same account on the inventory adjustment. Initially, the landed costs such as freight, customs, duties, and insurance should be recorded in a clearing General Ledger (GL) account when the bill is received. After receiving the goods and confirming the actual costs incurred, an inventory adjustment is made. This adjustment involves debiting inventory and crediting the clearing GL account to reflect the additional costs in the inventory's value.
For example, if a company receives a shipment of goods and incurs $500 in transportation and duty costs, these costs would first be recorded as an increase to the clearing account. Once the goods are in stock and the costs are finalized, the inventory account is increased by $500 (debit) and the clearing account decreased by $500 (credit), effectively transferring the landed costs to the inventory's carrying value.