Juniper Company Uses a Perpetual Inventory System

question 39

Multiple Choice

Juniper Company 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:

• A)Debit Merchandise Inventory $9,750;credit Cash $9,750.
• B)Debit Accounts Payable $9,750;credit Merchandise Inventory $9,750.
• C)Debit Merchandise Inventory $9,750;credit Sales Returns $1,500;credit Cash $8,250.
• D)Debit Merchandise Inventory $9,750;credit Accounts Payable $9,750.
• E)Debit Accounts Payable $8,250;debit Purchase Returns $1,500;credit Merchandise Inventory $9,750.

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Definitions:

Trading Securities

Financial assets bought and sold for short-term profit, often including stocks and bonds.

Fair Market Value

The price that property would sell for on the open market between an informed and willing buyer and seller.

Cost

The amount of money that is incurred in the production of goods or in providing services, which may include expenses related to materials, labor, and overhead.

Accrued Interest

Interest that has been incurred but not yet paid, often relating to bonds or loans.