A Merchandiser Returned Inventory Worth $2,000 That Was Purchased on Account

question 129

Multiple Choice

A merchandiser returned inventory worth $2,000 that was purchased on account. Under the periodic inventory system, the journal entry to record such returns would include:

• A)a debit to Purchase Returns and Allowances for $2,000 and a credit to Accounts Payable for $2,000.
• B)a debit to Accounts Payable for $2,000 and a $2,000 credit to Purchase Returns and Allowances.
• C)a debit to Purchases for $2,000 and a credit to Accounts Payable for $2,000.
• D)a debit to Accounts Payable for $2,000 and a credit to Purchases for $2,000.

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Definitions:

Fiscal Policy

Government actions intended to spark or diminish consumption.

Monetary Policy

Manipulations in the interest rates, the banking rules, and the volume of currency in a country, with a goal to spark or diminish consumption.

Budget Deficit

The financial situation where a government's expenditures exceed its revenues within a specific time period, leading to borrowing or debt accumulation.

Open Door Policy

A policy in which a company or nation maintains openness to trade with all countries or offers unhindered access to its services or office to its personnel.