A Company Purchased $1,800 of Merchandise on July 5 with Terms

question 219

Multiple Choice

A company purchased $1,800 of merchandise on July 5 with terms 2/10,n/30.On July 7,it returned $200 worth of merchandise.On July 28,it paid the full amount due.Assuming the company uses a perpetual inventory system,and records purchases using the gross method,the correct journal entry to record the merchandise return on July 7 is:

• A)Debit Merchandise Inventory $1,600; credit Cash $1,600.
• B)Debit Merchandise Inventory $200; credit Accounts Payable $200.
• C)Debit Merchandise Inventory $200; credit Sales Returns $200.
• D)Debit Accounts Payable $200; credit Merchandise Inventory $200.
• E)Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory $1,600.

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Definitions:

Downsloping

A term describing a downward trend or decrease, often used in economics to refer to declining prices or demand curves that slope downwards as price increases.

Nominal Interest

is the stated interest rate of a loan or financial product, not adjusted for inflation, representing the face value of the interest charged or earned.

Capital Good

Long-lasting goods that businesses use to produce goods and services, contributing to their productive capacity.

Rate Of Interest

The percentage charged on the total amount of borrowed money or paid on invested capital.