Question #1: a) Distinguish between FOB shipping point and FOB destination

Question #1:

a) Distinguish between FOB shipping point and FOB destination. Identify the freight terms

that will result in a debt to merchandise inventory by the purchase and a debit to freight

out by the seller. (2)

b) Explain the meaning of the credit term 2/10, n/30. (1)

c) Newman Hardware Store completed the following merchandising transactions in the

month of January, 2020. At the beginning of January, the ledger of Newman showed

Cash of Tk.50,000 and Newman, Capital of Tk.50,000.

Jan 1 Purchased merchandise on account from Jerry's Wholesale Supply Tk.4,200,

term 2/10, n/30.

2 Sold merchandise on account Tk.2,100, FOB destination, terms 2/10, n/45. The

cost of the merchandise sold was Tk.1,300.

4 Paid Tk. 240 freight on January 2 sale.

5 Received credit from Jerry's Wholesale Supply for merchandise returned Tk.300.

9 Received collections in full from customers billed on sales of Tk.2,100 on

January 2.

10 Paid Jerry's Wholesale Supply in full.

12 Purchased merchandise for cash Tk.1,400.

25 Received refund for poor quality merchandise from supplier on cash purchase

Tk.150.

27 Purchased merchandise from Cosmo Distributors Tk.1300, FOB shipping point,

term 1/10, n/30.

29 Paid freight on January 27 purchase Tk.130.