Question

ssume that Spacey Company uses a periodic inventory system and has these account balances: Purchases $404,000, Purchase Returns and Allowances $13,000, Purchase Discounts $9,000, and Freight-In $16,000. Determine net purchases and cost of goods purchased.

Answer 1

Net purchases including Freight-in and cost of goods purchased were $3666,000.

calculation:-

Purchases $404,000

Purchase Returns and Allowances $13,000

Purchase Discounts of $9,000,

Freight-In $16,000.

Net purchases and cost of goods purchased = ( $404,000 - $13,000 -$9,000 -  $16,000.)

Freight-in is the cost incurred to ship finished goods to a distributor or retailer. Freight-in is considered a selling expense and is expensed when incurred.

Freight-out is the cost of delivering finished goods to a customer. The cost of freight charges paid to ship goods sold to customers is called freight-out, and it is paid by the seller, not by the purchaser.

The shipping cost is to be paid by the buyer of merchandise purchased when the terms are FOB shipping point. Freight-in is considered to be part of the cost of the merchandise and should be included in inventory if the merchandise has not been sold. It is a direct expense and is thus debited to the trading account.

Learn more about  Freight-In here:-brainly.com/question/24920251

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