Juniper Company Uses a Perpetual Inventory System and the Gross

question 43

Multiple Choice

Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. 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 26, it paid the full amount due. The correct journal entry to record the merchandise return on August 11 is:

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

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Definitions:

Sales Contract

A legally binding agreement between buyer and seller detailing the terms and conditions of a sale of goods or services.

Acceptance

The act of agreeing to the terms of an offer, contract, or proposal, creating a binding agreement.

Additional Terms

Supplementary conditions or provisions added to a contract that were not included in the original agreement.

Statute Of Frauds

A state statute under which certain types of contracts must be in writing to be enforceable.