All the expenses relating to freight, loading and unloading of the goods, are booked under cartage expenses. Cartage expenses relates to purchase of goods or goods sold. Goods means the raw material, consumable items, semi finished goods or finished goods for trading purpose.

Cartage paid on anything other than trading items, is not booked under cartage expenses.For example cartage paid on machinery. This amount will be treated as cost of machinery not the cartage expenses.

Further, cartage expenses may be divided in to two parts:-

  1. Cartage Inward Expenses:- When the freight, loading and unloading expenses are incurred on the purchase of goods then these expenses will be booked under cartage inward expenses.
  2. Cartage Outward Expenses:- When the freight, loading and unloading expenses are incurred on the sale of goods then these expenses will be booked under cartage outward expenses.

Cartage Expenses are also known as Freight & Cartage Expenses or Freight and Forwarding Expenses.

Accounting Treatment of Cartage Expenses

Transaction:-  Cash paid to M/s Prompt Transport Company in respect of purchase of goods as  Freight Rs.5000/= and loading and unloading charged Rs.500/= as per receipt no. 1500 date 05.12.15.

Type of voucher to be prepared:– Cash Payment Voucher

Entry to be made:-

Cartage Expenses  a/c                     Dr.    Rs.5500/=

To Cash                                                                        Rs.5500/=

Narration:-   (Being the freight and loading and unloading charges paid to M/s Prompt Transport Company as per receipt No. 1500 dated 05.12.15 enclosed)

Treatment of Cartage Expenses in final Accounts

Cartage Expenses is shown in expenses column of trading account. Moreover, Cartage Inward Expenses should be shown in expenses side of Trading Account and Cartage Outward Expenses should be shown in expenses side of Profit and Loss Account.

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