Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. 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:
A) Debit Merchandise Inventory $9,750; credit Sales Returns $1,500; credit Cash $8,250.
B) Debit Accounts Payable $8,250; debit Purchase Returns $1,500; credit Merchandise Inventory $9,750.
C) Debit Accounts Payable $9,750; credit Merchandise Inventory $9,750.
D) Debit Merchandise Inventory $9,750; credit Cash $9,750.
E) Debit Merchandise Inventory $9,750; credit Accounts Payable $9,750.

Question

Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. 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:
A) Debit Merchandise Inventory $9,750; credit Sales Returns $1,500; credit Cash $8,250.
B) Debit Accounts Payable $8,250; debit Purchase Returns $1,500; credit Merchandise Inventory $9,750.
C) Debit Accounts Payable $9,750; credit Merchandise Inventory $9,750.
D) Debit Merchandise Inventory $9,750; credit Cash $9,750.
E) Debit Merchandise Inventory $9,750; credit Accounts Payable $9,750.

Quizplus · Accepted Answer

The purchase is recorded by debiting Merchandise Inventory and crediting Accounts Payable for the full amount of $9,750.

Juniper Company Uses a Perpetual Inventory System and the Gross