Logistics accounting involves tracking and managing costs and revenues associated with the transportation, storage, and distribution of goods. Below are some examples of journal entries related to logistics accounting.
1. Freight Expense for Inbound Goods
When a company incurs costs for transporting goods from a supplier to its warehouse, these costs are considered part of the cost of goods purchased.
Example 1: Recording Freight Expense for Inbound Goods
Scenario: On July 10, 2024, your company pays $2,000 to a logistics provider for transporting goods from a supplier.
Journal Entry:
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 07-10-2024 | Freight-In Expense | 2,000 | |
| 07-10-2024 | To Bank | 2,000 |
Explanation:
- Freight-In Expense will debited as part of the cost of goods purchased.
- Bank will credited to account for the payment made to the logistics provider.
2. Freight Expense for Outbound Goods
Freight expenses for shipping goods to customers are usually classified as selling expenses.
Example 2: Recording Freight Expense for Outbound Goods
Scenario: On August 15, 2024, your company pays $1,500 to a logistics provider for shipping goods to customers.
Journal Entry:
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 08-15-2024 | Freight-Out Expense | 1,500 | |
| 08-15-2024 | To Bank | 1,500 |
Explanation:
- Freight-Out Expense will debited as a selling expense related to delivering goods to customers.
- Bank will credited to reflect the payment made.
3. Customs Duty and Import Taxes
When importing goods, a company may incur customs duties or import taxes, which are added to the cost of the inventory.
Example 3: Recording Customs Duty and Import Taxes
Scenario: On September 1, 2024, your company pays $3,000 in customs duty for imported goods.
Journal Entry:
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 09-01-2024 | Inventory | 3,000 | |
| 09-01-2024 | To Bank | 3,000 |
Explanation:
- Inventory will debited to increase the cost of goods by the amount of customs duty paid.
- Bank will credited to account for the payment.
4. Storage Costs
Storage costs for holding goods in a warehouse are typically recorded as operating expenses unless they can be directly tied to the cost of goods sold.
Example 4: Recording Storage Costs
Scenario: On October 5, 2024, your company pays $4,000 for warehouse storage costs.
Journal Entry:
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 10-05-2024 | Storage Expense | 4,000 | |
| 10-05-2024 | To Bank | 4,000 |
Explanation:
- Storage Expense will debited as an operating expense related to warehousing goods.
- Bank will credited to reflect the payment made.
5. Insurance for Goods in Transit
Insurance costs for goods in transit are often considered part of the cost of the goods being transported.
Example 5: Recording Insurance Costs for Goods in Transit
Scenario: On November 20, 2024, your company pays $500 for insurance on goods being shipped from a supplier.
Journal Entry:
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 11-20-2024 | Inventory | 500 | |
| 11-20-2024 | To Bank | 500 |
Explanation:
- Inventory will debited to increase the cost of goods by the amount of insurance paid.
- Bank will credited to account for the payment.
6. Handling and Packaging Costs
Handling and packaging costs associated with preparing goods for shipment are often treated as operating expenses.
Example 6: Recording Handling and Packaging Costs
Scenario: On December 5, 2024, your company pays $1,200 for packaging and handling goods before shipment.
Journal Entry:
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 12-05-2024 | Packaging Expense | 1,200 | |
| 12-05-2024 | To Bank | 1,200 |
Explanation:
- Packaging Expense will debited as an operating expense related to preparing goods for shipment.
- Bank will credited to reflect the payment made.
7. Logistics Service Revenue
If your company provides logistics services, the revenue earned from such services is recorded as service revenue.
Example 7: Recording Logistics Service Revenue
Scenario: On December 15, 2024, your company earns $7,000 by providing logistics services to a customer.
Journal Entry:
| Date | Account Title | Debit ($) | Credit ($) |
|---|---|---|---|
| 12-15-2024 | Accounts Receivable | 7,000 | |
| 12-15-2024 | To Service Revenue | 7,000 |
Explanation:
- Accounts Receivable will debited to recognize the amount owed by the customer.
- Service Revenue will credited to record the income earned from providing logistics services.
These examples cover key aspects of logistics accounting, including recording costs associated with transportation, storage, insurance, and service revenue.