A Company That Uses a Perpetual Inventory System Purchased Inventory $$\begin{array} { | c | r | r | } \hline \text { Purchase Returns } & 500 & \\\hline \text { Accounts Payable } & & 500 \\\hline\end{array}$$

question 129

Multiple Choice

A company that uses a perpetual inventory system purchased inventory on account and later returned goods worth $500 to the vendor.Which of the following would be the correct journal entry to record these returns?

• A) \[\begin{array} { | c | r | r | }
• \hline \text { Purchase Returns } & 500 & \\
• \hline \text { Accounts Payable } & & 500 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | r | r | }
• \hline \text { Accounts Payable } & 500 & \\
• \hline \text { Purchase Returns } & & 500 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Merchandise Inventory } & 500 & \\
• \hline \text { Accounts Payable } & & 500 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | r | r | }
• \hline \text { Accounts Payable } & 500 & \\
• \hline \text { Merchandise Inventory } & & 500 \\
• \hline
• \end{array}\]

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Definitions:

Accounts Payable

Short-term liabilities of a company, representing amounts owed to suppliers or creditors for goods and services received but not yet paid for.

Office Supplies

Consumable items used in offices on a regular basis, such as paper, pens, and toner cartridges.

Cash Dividends

Dividends paid out in cash by a company from its earnings to its shareholders at declared dividend dates.

Utility Bill

A statement of charges for the consumption of utilities such as electricity, gas, water, or sewage.