Using a perpetual inventory system, the entry to record the return of merchandise purchased on account includes a

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When merchandise is returned, it is added back to the inventory account as the company is taking it back into their stock. Thus, the entry would include a credit to inventory. There would be no debit to cost of goods sold or credit to sales as the item is not sold again. Additionally, there would be no credit to accounts payable as the merchandise has already been received and paid for.

Using a Perpetual Inventory System, the Entry to Record the Return