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Sales Freight Term Party responsible for paying freight invoice Account debited for freight costs
FOB shipping point
Understanding the Business Transaction
FOB Shipping Point, buyer pays invoice
Mar. 15, 2015 Majestic Products, Inc. purchased goods from Fulton Corp. on Mar. 15, 2015, FOB shipping point. Boston Trucking invoiced the freight on these goods to Majestic for $250. Under the perpetual inventory method the cost of freight paid by the buyer is part of the cost of merchandise.
FOB Destination, seller pays invoice
May 6, 2015 Fun Supply Inc. sold goods to Marvel Games, Inc. on May 6, 2015, FOB destination. Mid States Trucking Inc. invoiced the freight on these goods to Fun Supply for $195. Freight paid by the seller, FOB destination, is a selling expense.
FOB Shipping point, seller prepays freight
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