Juniper Company uses a perpetual inventory system.The company purchased $9,750 of merchandise on August 7 with terms 1/10,n/30.On August 11,it returned $1,500 worth of merchandise.On August 26,it paid the full amount due.The correct journal entry to record the merchandise return on August 11 is:
A)Debit Accounts Payable $1,500;credit Cash $1,500.
B)Debit Accounts Payable $1,500;credit Merchandise Inventory $1,500.
C)Debit Merchandise Inventory $1,500;credit Sales Returns $1,500.
D)Debit Merchandise Inventory $1,500;credit Cash $1,500.
E)Debit Accounts Payable $1,500;credit Purchase Returns $1,500.

Question

Quizplus · Accepted Answer

The correct journal entry is to debit Accounts Payable for the amount returned and credit Merchandise Inventory for the same amount. This will reduce the amount owed to the supplier and reduce the inventory account balance accordingly.

Juniper Company Uses a Perpetual Inventory System