Why does a merchandising company using a perpetual inventory system include freight out in its closing entries, and not freight in? Select answer from the options below Because freight out is included in the cost of goods sold while freight in is a separate selling expense. Because freight out is an expense it is part of closing entries, while freight in is an equity item and so not part of closing entries. Freight out has a debit balance while freight in has a credit balance making it not part of the closing entry process. Freight out is a separate selling expense while freight in is included as part of the cost of inventory