A company that uses a perpetual inventory system purchased inventory on account and later returned goods worth $600 to the vendor.Which of the following would be the correct journal entry to record these returns?
A) $$\begin{array} { | c | r | r | }
\hline \text { Purchase Returns } & 600 & \
\hline \text { Accounts Payable } & & 600 \
\hline
\end{array}$$
B) $$\begin{array} { | c | r | r | }
\hline \text { Accounts Payable } & 600 & \
\hline \text { Purchase Returns } & & 600 \
\hline
\end{array}$$
C) $$\begin{array} { | c | r | r | }
\hline \text { Merchandise Inventory } & 600 & \
\hline \text { Accounts Payable } & & 600 \
\hline
\end{array}$$
D) $$\begin{array} { | l | r | r | }
\hline \text { Accounts Payable } & 600 & \
\hline \text { Merchandise Inventory } & & 600 \
\hline
\end{array}$$

Question

A company that uses a perpetual inventory system purchased inventory on account and later returned goods worth $600 to the vendor.Which of the following would be the correct journal entry to record these returns?
A) $$\begin{array} { | c | r | r | } 
\hline \text { Purchase Returns } & 600 & \
\hline \text { Accounts Payable } & & 600 \
\hline
\end{array}$$
B) $$\begin{array} { | c | r | r | } 
\hline \text { Accounts Payable } & 600 & \
\hline \text { Purchase Returns } & & 600 \
\hline
\end{array}$$
C) $$\begin{array} { | c | r | r | } 
\hline \text { Merchandise Inventory } & 600 & \
\hline \text { Accounts Payable } & & 600 \
\hline
\end{array}$$
D) $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Payable } & 600 & \
\hline \text { Merchandise Inventory } & & 600 \
\hline
\end{array}$$

Quizplus · Accepted Answer

In a perpetual inventory system, returns are recorded by debiting Accounts Payable to reduce the liability and crediting Merchandise Inventory to reduce the inventory balance.