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 16,it paid the full amount due.The correct journal entry to record the payment on August 16 is:
A)Debit Merchandise Inventory $8,250;credit Cash $8,250.
B)Debit Cash $8,250;credit Accounts Payable $8,250.
C)Debit Accounts Payable $8,250;credit Merchandise Inventory $82.50;credit Cash $8,167.50.
D)Debit Accounts Payable $9,750;credit Merchandise Inventory $97.50;credit Cash $9,652.50.
E)Debit Accounts Payable $8,167.50;credit Cash $8,167.50.

Question

Quizplus · Accepted Answer

The company originally owed $9,750 but returned $1,500, reducing the payable to $8,250. Paying within the discount period (1/10) allows a 1% discount on $8,250, which is $82.50. Therefore, the payment is $8,167.50, and the discount is recorded as a reduction in Merchandise Inventory.

Juniper Company Uses a Perpetual Inventory System