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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Who bears the freight when the terms of sale are (a) FOB shipping point, (b) FOB destination?

To determine

Transportation Costs: The costs of delivering the merchandise inventory from the manufacturer to the buyer are termed as transportation cost and are differentiated on the basis of terms of the payment of transportation charges or freight by the buyer or the seller.

FOB (Free on Board) Shipping point means that the buyer pays all costs incurred for the delivery of goods once the goods is left from the supplier’s warehouse.

FOB (Free on Board) Destination means that the buyer pays all costs incurred for the delivery of goods once the goods is delivered at buyer receiving point.

To Describe: Who pay the freight charges at the time of (a) FOB shipping point, and (b) FOB destination.

Explanation

(a)

FOB shipping point:

Bearer of freight: The cost of transportation or shipment charges or freight from the point of origin of shipment to the point of destination is beard by the buyer...

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