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 16,it paid the full amount due.The correct journal entry to record the payment on August 16 is:
A)Debit Merchandise Inventory $8,250; credit Cash $8,250.
B)Debit Cash $8,250; credit Accounts Payable $8,250.
C)Debit Accounts Payable $8,250; credit Merchandise Inventory $82.50; credit Cash $8,167.50.
D)Debit Accounts Payable $9,750; credit Merchandise Inventory $97.50; credit Cash $9,652.50.
E)Debit Accounts Payable $8,167.50; credit Cash $8,167.50.

Question

Quizplus · Accepted Answer

The correct entry accounts for the return of merchandise, reducing the payable to $8,250 ($9,750 - $1,500), and then applies the 1% discount ($82.50) for early payment, resulting in a cash payment of $8,167.50.

Juniper Company Uses a Perpetual Inventory System and the Gross