Chapter 5, Problem 5.4BE

(a)

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.

To Calculate: The amount to be paid in full settlement for invoice a.

(b)

To determine

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. 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.

To Calculate: The amount to be paid in full settlement for invoice b.