general rule include all costs needed to get the

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Unformatted text preview: hat costs are included/excluded? - General rule: Include all costs needed to get the item ready for sale. - Cost of the goods: - Shipping (freight) costs (from buyer’s perspective) YES ✓ F.O.B. destination: NO ✓ F.O.B. shipping point: YES Purchasing Inventory Example On January 1 we purchase 100 items on account at $5/item. We receive the items on January 3. Shipping costs are $50 (paid with cash). Record this transaction if shipping is: 1) F.O.B. destination 2) F.O.B. shipping point Purchasing Inventory • What costs are included? - Discounts and returns ✓ Clyde Company purchases $10,000 worth of inventory on credit. Two days later, Clyde returns $200 of the inventory because it is damaged. The purchase contract states 5/10, n/30. Record these events if: - Clyde pays 9 days after purchasing the goods. - Which of the journal entries that you recorded would change if Clyde pays 11 days after purchasing the goods? Illustration 6-24 Illustration 6-24 Net sales Cost of goods sold Gross profit Inventory $12,000 8,046 $ 3,954 Inventory.......... Purchases.............
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