Final Answer:
When Smart Touch Learning records its journal entry for the $50 freight charge on March 1 with FOB Shipping Point terms, it will debit the Freight Expense account and credit Cash or Accounts Payable, depending on whether the payment is made immediately or later.
Step-by-step explanation:
In a FOB Shipping Point arrangement, the buyer assumes ownership and responsibility for the goods as soon as they are shipped from the seller's location. Therefore, when Smart Touch Learning incurs a $50 freight charge on March 1 for goods purchased with FOB Shipping Point terms, the company is responsible for the shipping costs. To record this transaction, Smart Touch Learning will make a journal entry. The Freight Expense account is debited to reflect the cost incurred, and the Cash or Accounts Payable account is credited to show the outflow of funds or the liability for the freight charge, respectively.
The specific account credited (Cash or Accounts Payable) depends on the timing of the payment. If Smart Touch Learning pays the freight charge immediately, Cash is credited. If the payment is deferred, creating a liability, Accounts Payable is credited. This journal entry accurately reflects the financial impact of the freight charge on the company's accounts and ensures that expenses are appropriately recognized in the period in which they are incurred. Overall, this accounting practice aligns with the principle of recognizing expenses when they are earned or incurred, contributing to accurate financial reporting and transparency in financial statements.