Perpetual Inventory - Purchases Video Lessons

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Problem: J Company uses a perpetual inventory system. The company purchased $9,750 of merchandise on August 7 with terms 2/10, 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 Merchandise Inventory $1,500; credit Sales Returns $1,500. b. Debit Accounts Payable $1,500; credit Purchase Returns $1,500. c. Debit Accounts Payable $1,500; credit Merchandise Inventory $1,500. d. Debit Accounts Payable $1,500; credit Cash $1,500.

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Problem Details

J Company uses a perpetual inventory system. The company purchased $9,750 of merchandise on August 7 with terms 2/10, 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 Merchandise Inventory $1,500; credit Sales Returns $1,500.

b. Debit Accounts Payable $1,500; credit Purchase Returns $1,500.

c. Debit Accounts Payable $1,500; credit Merchandise Inventory $1,500.

d. Debit Accounts Payable $1,500; credit Cash $1,500.

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Based on our data, we think this problem is relevant for Professor Conrad's class at UTSA.