> Debits to Merchandise Inventory Freight terms which required the buyer to pay the freight cost Requires a physical count of goods on hand to calculate cost of goods 10. Gross Profit Margin > encourage early payment Sales less sales returns and allowances and sales discounts Deducted from net sales to calculate gross profit A calculation of gross profit divided by net sales The merchandise inventory account balance should equal ending inventory, at all times Freight terms which require the seller to pay the freight cost 11. FOB shipping point