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 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 Purchase Returns $1,500.
B) Debit Accounts Payable $1,500; credit Cash $1,500.
C) Debit Accounts Payable $1,500; credit Merchandise Inventory $1,500.
D) Debit Merchandise Inventory $1,500; credit Cash $1,500.
E) Debit Merchandise Inventory $1,500; credit Sales Returns $1,500.

Question

Quizplus · Accepted Answer

The correct way to record a purchase return for a company using the perpetual inventory system and gross method of accounting for purchases is to debit the Accounts Payable account and credit the Merchandise Inventory account. Therefore, the correct journal entry to record the merchandise return on August 11 is:
Debit Accounts Payable $1,500; credit Merchandise Inventory $1,500.

Juniper Company Uses a Perpetual Inventory System and the Gross