What is FOB destination freight collect?

What is FOB destination freight collect?

FOB Destination, Freight Collect: The receiver of goods (the buyer) pays the freight charges upon delivery of the goods. The buyer does not take ownership or liability for the goods until the cargo gets to the buyer’s premises.

What is an example of FOB destination?

For example, assume Company XYZ in the United States buys computers from a supplier in China and signs a FOB destination agreement. Assume the computers were never delivered to Company XYZ’s destination, for whatever reason.

Who pays FOB destination freight collect?

FOB Destination, Freight Collect and Allowed The buyer pays for the freight costs, but deducts the cost from the supplier’s invoice. The seller still owns the goods while they are in transit.

Is FOB collect or prepaid?

FOB Destination, freight collect. This term is comparable to freight prepaid, but the party receiving the shipment is responsible for paying for freight costs upon delivery. In other words, the receiver does not take ownership or liability for shipment until delivery.

How do I record FOB destination?

FOB Destination means the seller is responsible for the merchandise, and the cost of shipping is expensed immediately in the period as a delivery expense. The seller would record an increase (debit) to Delivery Expense, and a decrease to Cash (credit).

What does freight collect mean?

A freight collect specifically indicates who is responsible for the cost of freight and any addition charges incur during shipment. If freight collect is specified, the consignee or the receiver will be responsible for the freight.