Dividing Freight Shipping Costs Bookkeeping Question

by Newbie

Dividing Freight Shipping Costs

Dividing Freight Shipping Costs

I have an invoice for six different items, consisting of a mix of raw products and equipment.

The total shipping cost on the invoice is $8.50. I need to allocate the shipping costs appropriately to each item, particularly the raw products, to accurately determine their total cost.

How should I allocate the shipping costs among the items based on their individual quantities and pricing?

I want to ensure that the shipping costs are properly incorporated into the cost calculation for each raw product item.

Thanks for any help!

Newbie

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Jul 17, 2023
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starstarstarstarstar 		Allocating Shipping Costs
by: Stephanie

To allocate the shipping costs among the different items on your invoice, you can use a proportional allocation method based on the quantity or weight of each item.

Calculate the percentage of the total quantity or weight represented by each raw product item, and then apply that percentage to the total shipping cost.

Multiply the shipping cost by the respective percentage for each raw product item to determine its allocated shipping cost.

This approach ensures that the shipping costs are distributed accurately based on the contribution of each raw product item to the total quantity or weight.

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Freight Charges

My question is should freight charges be included in the sales income?

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Jul 17, 2023
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starstarstarstarstar 		Freight Charge Determination
by: BB

When determining the proper treatment of freight charges, it is important to consider the specific accounting principles and guidelines applicable to your business.

Generally, if the freight charges are directly related to the sale of goods or services and are charged to the customer as a separate item, they should be included as part of the sales income.

However, if the freight charges are incurred by the business and not separately invoiced to the customer, they may be classified as an expense rather than included in sales income.

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Freight-in

by Peggy
(Alexandria,La, U.S.A. )

I'm learning bookkeeping and my question is; If I write a check for a product to a company with freight-in included, how would I entry in a special journal and the general ledger? thank you

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Aug 24, 2023
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starstarstarstarstar 		Freight In Bookkeeping
by: BB

When you write a check for a product and it includes freight-in (shipping costs), you will need to record the entire amount in your accounting system, but you'll want to differentiate between the cost of the goods and the cost of the shipping. Here's how you could make the entry:

In the Special Journal (Purchases Journal):

Debit: Inventory (for the total amount including both the product and freight-in costs)

Credit: Accounts Payable (for the total amount including both the product and freight-in costs)

In the General Ledger:
You'll create detailed entries to break down the costs further:

Debit: Inventory (for the cost of the product itself)

Debit: Freight-In or Shipping Expense (for the shipping cost)

Credit: Accounts Payable (for the total amount including both the product and freight-in costs)

The specific accounts used might vary based on the nature of the product and your company's accounting system, but this provides a general guide.

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