Im having trouble with this part of my homework. i recieve a seperate bill for freight charges ($314) and i was wondering if i debit merchendise inventory or transportion-in. My freind told me it was Cost of goods sold, but it doesn't make sense since you haven't sold anything. Please help.
Also is this journal entry correct? I recieved a billed and issued a check for transportation fees.
Debit-transportation-in
credit-cash|||the freight to get the stuff to you is part of its cost -- whatever the stuff is.
if you're buying inventory, it has to go into inventory somehow. so "transportation-in" is fine IF you know that during closing that account is closed to inventory.
if you're paying freight on equipment, however, the cost has to end up as part of the equipment [asset] on the books so it can be depreciated.
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