Free on Board (FOB) Explained: Who's Liable for What in Shipping?

Merchandise with a list price of 4,700 was purchased on account; terms FOB shipping point; 1/10, n/30. The seller prepaid freight costs of100. Prior to payment, 1,600 of the merchandise was returned. The invoice was paid within the discount period.Record the foregoing transactions of the buyer in the sequence indicated below, assuming a perpetual inventory system is used.(a) Purchased the merchandise.(b) Recorded receipt of the credit memo for merchandise returned.(c) Paid the amount owed.

Walberg Associates, antique dealers, purchased goods for 75,000. Terms of the purchase were FOB shipping point, and the cost of transporting the goods to Walberg Associates' warehouse was2,400. Walberg Associates insured the shipment at a cost of 300. Prior to putting the goods up for sale, they cleaned and refurbished them at a cost of980. Determine the cost of inventory.

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