Burning Oak, Inc. is a merchandiser of tree trimming equipment. During the year, the company purchased $433,800 of inventory from its suppliers and paid $7,625 in freight in for inventory shipped FOB shipping point. Given the company returned $12,760 of merchandise to its suppliers and took advantage of $9,900 in early payment discounts during the year, which of the following statements is correct? As merchandise inventory is purchased from the supplier the transaction affects Burning Oak's income statement. The $12,760 of merchandise returned is reported as cost of goods sold in Burning Oak's accounting records. The net cost of merchandise purchased by Burning Oak was $418,765. As Burning Oak sells the inventory, the cost is reported on its balance sheet. The freight in of $7,625 is not accounted for in Burning Oak's accounting records