ABC Mart received a $20 freight bill for merchandise it purchased with freight terms of FOB shipping point. Assuming it paid the bill immediately, demonstrate the journal entry required to record the freight charges, assuming the periodic inventory system is used.

Multiple choice question.

Debit Merchandise Inventory $20 and credit Cash $20.

Debit Transportation-In $20 and credit Merchandise Inventory $20.

Credit Transportation-In $20 and debit Cash $20.

Debit Transportation-In $20 and credit Cash $20.