What is FOB destination freight prepaid?

What is FOB destination freight prepaid?

FOB Destination, Freight Prepaid: The seller/shipper pays all the shipping costs until the cargo arrives at the buyer’s store. The buyer does not pay any shipping costs. FOB Destination, Freight Collect: The receiver of goods (the buyer) pays the freight charges upon delivery of the goods.

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.

Is FOB freight prepaid?

FOB Destination, freight prepaid. This add-on means the shipper bears all responsibility for a shipment until it arrives at the destination. In addition, the shipper pays for the shipment, and the receiver is not responsible for the payment of any shipping costs.

Who pays for freight on FOB destination?

With FOB shipping point, the buyer pays for shipping costs, in addition to any damage during shipping. The buyer is the one who would file a claim for damages if needed, as the buyer holds the title and ownership of the goods.

How do I account for 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 is a FOB Destination?

Free on Board: Destination In a FOB destination agreement, the seller retains ownership of the goods (and is therefore responsible for replacing damaged or lost goods) up until the point where the goods have reached their final destination.