Question

Alpha used a periodic inventory system. Merchandise was purchased on account for $2,000. The transaction was F.O.B. shipping point. Freight of $100 was originally paid by the seller. Alpha's journal entry to reflect this purchase includes debits to:________.

A) Freight-out for $100.
B) Freight-in for $100.
C) Accounts Payable for $2100.
D) Purchases for $2100.

Answer 1

D) Purchases for $2100.

Step-by-step explanation:

It will have to pay teh seller he 2,000 of the merchandise and 100 of the freight as the term where FOP shipping point. This means, the cost of transportation are charged to us as the goods are already ours once they reach the port.

Under perpetual inventory system we would be doing a debit to merchandise inventory but, in periodic we will determinate inventory at end-of-the-monht or year-end