35.4 Same Vendor vs. Different Vendors

When a vendor bills for freight, they are paying the shipping company for the freight charges. In this case, you are reimbursing the vendor for the freight charges.

At times, the shipping company bills freight charges directly to the receiving customer. When this happens, the vendor doesnt (or shouldnt) bill your company for freight charges. Instead, the shipping company is paid directly for the freight charges.

How the charges are paid determines how the freight charges are entered. If the shipping company sends a bill for the freight charges, a voucher can be entered to pay the bill. The picture below illustrates creating a voucher to record freight charges for a shipment. In this example, freight is being tracked by item (notice that individual inventory items are charged, not a General Ledger account).

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Frequently, one-time shipments are sent freight-COD. In this case, you must write a manual check when the shipment is received. The picture belows shows a manual check entered to pay the freight on a shipment. In this case, the freight is being tracked separate from inventory (notice that the detail line posts to a General Ledger account, not an inventory product).

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To track the freight by item, the detail of the manual check would need multiple records to split the freight charges (see the detail of the previous voucher example).

Regardless of how the freight is paid, the same options of freight costing apply (item by item, or blanket). The voucher example showed an item by item application of freight. A single entry could have been made to the freight General Ledger account. The check example used a blanket application. It could have used item by item distribution. Again, the choice of freight tracking is yours.