An electronics retailer purchases $25,000 of computers on account for resale.The retailer returns $5,000 of computers to the supplier and receives a credit on their account.Under a perpetual inventory system the journal entry to record the returned goods will include:
A)$5,000 will be debited to Purchases Returns and $5,000 will be credited to Accounts Payable.
B)$5,000 will be debited to Accounts Payable and $5,000 will be credited to Inventory.
C)$25,000 will be debited to Accounts Payable and $25,000 will be credited to Inventory.
D)$20,000 will be credited to Inventory and $20,000 will be credited to Purchases.

Question

Quizplus · Accepted Answer

Under a perpetual inventory system, when goods are returned to the supplier, the inventory account is directly adjusted. Therefore, the inventory account is debited to decrease it for the cost of the returned goods ($5,000), and accounts payable is credited to reduce the liability owed to the supplier by the same amount.

An Electronics Retailer Purchases $25,000 of Computers on Account for Resale.The