Returned merchandise for credit under the perpetual inventory method. This will be recorded with:
A) a debit to Accounts Payable and a credit to Sales Returns and Allowances.
B) a debit to Sales Returns and Allowances and a credit to Merchandise Inventory.
C) a credit to Accounts Payable and a debit to Merchandise Inventory.
D) a debit to Accounts Payable and a credit to Merchandise Inventory.

Question

Quizplus · Accepted Answer

Under the perpetual inventory system, when merchandise is returned, the company debits Accounts Payable to reduce the liability and credits Merchandise Inventory to increase the inventory on hand.

Returned Merchandise for Credit Under the Perpetual Inventory Method