Returned merchandise paid for within the discount period for cash.The perpetual inventory system is in use.This will be recorded with:

Question

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Since the merchandise was returned for cash within the discount period, the original payment for the merchandise would have been recorded as a debit to an asset (such as Accounts Payable) and a credit to Purchases. When the merchandise is returned, the entry would be a debit to an asset (such as Cash) and a credit to the original asset account (such as Accounts Payable). The perpetual inventory system would also update the inventory asset account for the returned merchandise. Therefore, the correct choice is a debit to an asset and a credit to an asset.

Returned Merchandise Paid for Within the Discount Period for Cash