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Phalkon Clement
on Nov 12, 2024

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If merchandise costing $3,500, terms FOB destination, 2/10, n/30, with prepaid freight costs of $125, is paid within 10 days, the amount of the purchases discount is $70.

FOB Destination

This term refers to a shipping agreement where the seller bears the shipping costs and remains responsible for the goods until they are delivered to the buyer's location.

Purchase Discount

A deduction that a buyer receives on the invoice price of a purchase if the payment is made within a specified period.

Prepaid Freight

Costs paid in advance for the transportation of goods, often recorded as an asset on the balance sheet until the service is utilized.

  • Acquire knowledge on the treatment of trade discounts and purchase discounts in accounting practices.
  • Identify the ownership and responsibility for freight costs in FOB shipping point and FOB destination terms.
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Michelle MaciasNov 12, 2024
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