What is the Journal Entry for Carriage Inward?

by Badawi

Q: What is the journal entry for carriage inward?

freight shipping carriage inward

Remember, carriage simply means transportation costs and carriage inward (or inwards) is the cost of transporting goods into your business.

In other words, you are paying for goods to be shipped or delivered to you from your supplier.

Carriage inward is recognized as an expense.

Here is the journal entry we would do to record carriage inward:

Dr Carriage Inward
Cr Bank or Accounts Payable

Note that the Carriage Inward expense actually becomes part of the cost of the inventory (goods) that you purchase.

One would thus do a journal entry to transfer the carriage inward expense to either the Purchases account (for the periodic inventory system) or Inventory account (for the perpetual inventory system):

Dr Purchases or Inventory
Cr Carriage Inward

Eventually carriage inward, which is part of the purchases or inventory account, becomes part of the final Cost of Goods Sold figure in the income statement.

Note that carriage inward is also referred to as Freight on Purchases or Freight In.

Michael Celender
Founder of Accounting Basics for Students

Related Questions & Tutorials:

Click here for more Basic Accounting Questions and Answers

Click here to post comments

Return to Ask a Question About This Lesson!.

© Copyright 2009-2021 Michael Celender. All Rights Reserved. 
Click here for Privacy Policy.