Juniper Company, Inc. 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 purchase on August 7 is:

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Since the company uses a perpetual inventory system, the initial purchase of $9,750 should be recorded as a debit to Merchandise Inventory (asset account) and a credit to Accounts Payable (liability account). The return of $1,500 worth of merchandise is not relevant to this initial journal entry. When the payment is made on August 16, it will be recorded with a debit to Accounts Payable and a credit to Cash.