A Company That Uses a Perpetual Inventory System Purchased Inventory

question 126

Multiple Choice

A company that uses a perpetual inventory system purchased inventory on account and later returned goods worth $700 to the vendor. Which of the following would be the correct journal entry to record these returns?

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Definitions:

Trading Security

A security bought and held primarily for sale in the near term to generate income on short-term price differences.

Available-For-Sale Security

A type of investment in debt or equity securities that is not classified as held-to-maturity or trading securities and can be sold in the short term.

Operating Activity

Transactions and events related to the core business functions of an organization, such as sales and purchases of goods or services.

Financing Activities

Transactions and events that affect the long-term liabilities and equity of a company, such as issuing debt, repaying loans, or distributing dividends.