Journal Entry for Freight Paid for Purchase of Furniture: Correcting the Debit

When you purchase furniture and the freight costs are not debited to the freight account, it is important to rectify the accounting entry to ensure accurate financial records. This article will guide you through the proper journal entry to reflect the freight expense.

Journal Entry to Correct Freight Expenses

To accurately record the freight expense related to the purchase of furniture, you need to make the following journal entry:

Account Title Debit Credit Freight Expense [Amount] Accounts Payable or Cash [Amount]

Explanation: Freight Expense: Debit this account to recognize the expense incurred for freight services related to the furniture purchase. Accounts Payable or Cash: Credit this account to reflect the liability if the payment was made on credit, or the cash payment if it was made immediately.

For instance, if the total freight paid was 500, the journal entry would be:

Account Title Debit Credit Freight Expense 500 Accounts Payable 500

This ensures that the freight expense is accurately reflected in your financial records.

Additional Entry for Furniture A/C

Since the carriage (freight) should be added to the value of the furniture, you should also make an entry to the Furniture A/C.

Account Title Debit Credit Furniture A/C 1750 Cash A/C 1750

Explanation: Furniture A/C: Debit this account for the total cost of the furniture including the freight expense. Cash A/C: Credit this account to reflect the payment made for the furniture including the freight.

Historical Cost Principle and Fixed Assets

Based on the principle of historical cost, all expenses related to acquiring a fixed asset, such as furniture, should be recorded in the asset account. Fixed assets like furniture are typically purchased for use in the business rather than for resale. Thus, the freight cost is considered an integral part of the purchase price and should be included in the value of the furniture.

For example, if you are trading clothing and purchase a revolving chair for 1500, including a 250 carriage cost, the journal entry would be:

Account Title Debit Credit Furniture A/C 1750 Cash A/C 1750

Explanation: Furniture A/C: The total amount of the purchased furniture, including freight, is debited to the furniture account. Cash A/C: The total amount paid, which includes the cost of the furniture and freight, is credited to the cash account.

By following these journal entries, you ensure your financial statements are accurate and reflective of the true cost of the assets purchased.