ABC Mart received a $20 freight bill for merchandise it purchased with freight terms of FOB shipping point. Assuming it paid the bill immediately, demonstrate the journal entry required to record the freight charges, assuming the periodic inventory system is used. Multiple choice question. Debit Merchandise Inventory $20 and credit Cash $20. Debit Transportation-In $20 and credit Merchandise Inventory $20. Credit Transportation-In $20 and debit Cash $20. Debit Transportation-In $20 and credit Cash $20.

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Financial Transaction Analysis

The transaction analysis is done with the help of the accounting equation. The basic accounting equation is alternatively known as the balance sheet equation is based on the double-entry system which says that for each transaction happening in a business, at least two accounts should be affected I.e. both the debit side and the credit side should be equal. The Accounting Equation is