Final answer:
Shipping costs associated with a sale are recorded as a selling expense, not as part of merchandise inventory. When a credit card is used for such payments, it is a short-term loan that must be repaid to the credit card company.
Step-by-step explanation:
When shipping costs are paid by the purchaser on the arrival of merchandise, these costs are typically added to the merchandise inventory account, as they are considered part of the cost of purchasing the inventory. However, if the transportation costs are related to a sale, like the payment made on August 9th for the August 5th sale, this cost is generally recorded as a selling expense rather than being added to the inventory value. Hence, it would not increase the merchandise inventory account but would be recorded as an expense on the income statement for the period in which the sale occurred.
Regarding the payment method, when a credit card is used to pay for such shipping costs, the credit card company immediately transfers money to the seller, acting as a short-term loan to the cardholder. This amount is then owed to the credit card company by the cardholder at the end of the billing cycle.