A Firm Uses the Periodic Inventory Method

question 81

Multiple Choice

A firm uses the periodic inventory method.Which of the following entries would be made to record a return of $220 of inventory purchased on credit,including GST?

• A)The accounting entry would be a $200 debit to Accounts payable and a $200 credit to Purchases.
• B)The accounting entry would be a $220 debit to Purchases and a $220 credit to Accounts payable.
• C)The accounting entry would be a $200 debit to Purchase returns and allowances,a $20 debit to GST clearing and a $220 credit to Accounts payable.
• D)The accounting entry would be a $220 debit to Accounts payable a $200 credit to Purchase returns and allowances,and a $20 credit to GST clearing.

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Definitions:

Merchant Capitalism

An economic phase in which merchants' wealth is accumulated through trade and the exploitation of international commerce, often preceding industrial capitalism.

Commercial Use

The exploitation of products, services, or activities with the primary goal of generating profit and economic growth.

Seafaring Trade

The exchange of goods and services across the seas and oceans, requiring navigational and maritime skills developed throughout human history.

Informal Economy

Economic activities that occur outside of formal regulatory frameworks, often lacking in legal protection and involving cash-based transactions.