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Accounting for Merchandising Businesses

Accounting for Merchandising Businesses. LO 3c – Recording Freight and Sales Tax Transactions. LO 3. Chart of Accounts. LO 3. Freight & Sales Tax. Purchases and sales of merchandise often involve transactions to record freight and sales taxes. LO 3. Freight.

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Accounting for Merchandising Businesses

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  1. Accounting for Merchandising Businesses LO 3c – Recording Freight and Sales Tax Transactions

  2. LO 3 Chart of Accounts

  3. LO 3 Freight & Sales Tax • Purchases and sales of merchandise often involve transactions to record freight and sales taxes.

  4. LO 3 Freight • If ownership of the merchandise passes to the buyer when the seller delivers the merchandise to the freight carrier, the terms are said to be FOB (free on board) shipping point.

  5. LO 3 Freight On June 10, NetSolutions buys merchandise from Magna Data on account, $900, terms FOB shipping point and pays the shipping cost of $50.

  6. LO 3 Freight • If ownership of the merchandise passes to the buyer when the buyer receives the merchandise, the terms are said to be FOB (free on board) destination.

  7. LO 3 Sale Plus Freight Cost On June 15, NetSolutions sells merchandise to Kranz Company on account, $700, terms FOB destination. The cost of the merchandise sold is $480.

  8. LO 3 Sale Plus Freight Cost On June 15, NetSolutions pays freight of $40 on the sale of June 15.

  9. LO 3 Seller Prepays Freight On June 20, NetSolutions sells merchandise to Planter Company on account, $800, terms FOB shipping point. NetSolutions paid freight of $45, which was added to the invoice. The cost of the merchandise sold is $360.

  10. LO 3 Seller Prepays Freight

  11. LO 3 Freight Terms

  12. LO 3 Freight Terms

  13. LO 3 Sales Taxes Sellers collect sales tax at the time of a sale on behalf of the state or local taxing authority.

  14. LO 3 Sales Taxes On August 12, merchandise is sold on account to Lemon Company, $100. The state has a 6% sales tax.

  15. LO 3 Sales Taxes On a regular basis, the seller pays to the taxing authority (state) the amount of the sales taxes collected.

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