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Unformatted text preview: -ownership passes when goods reach shipping board FOB Destination-seller pays freight Under perpetual inventory system, when a buyer pays the freight, that is a cost of inventory *therefore, increase merchandising inventory Freight costs incurred by the seller are an operating expense CLICKER: the Shoe Box paid freight of $300 on the purchase of merchandise. What account would be debited by Shoe Box? 1. Freight-in 2. Freight expense 3. Freight-out 4. Inventory Purchase returns and allowances Purchase return- credit or cash Purchase allowance- keep merchandise and reduce what you owe Purchase discounts 1. Purchaser saves money 2. Shortens seller operating cycle *THE SLIDES FROM CLASS ARE ON MOODLE...
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