4. Purchase of merchandise with freight-in. a. Merchandise is purchased on account, $2,700 plus freight charges of $100. Terms of the sale were FOB shipping point. b. Payment is made for the cost of merchandise and the freight charge. Feedback Check My Work The journal entry for cash purchase of merchandise involves an increase in purchases and a decrease in cash. Trade discounts are not recorded in the accounting records. The net amount is used in the journal entry. The journal entry for the purchase of merchandise on account involves an increase in purchases and in accounts payable/Vendor Name