A Firm Uses the Periodic Inventory Method

Multiple Choice

A firm uses the periodic inventory method. Which of the following entries would be made to record a return of $220 of inventory purchased on credit, including GST?

A) The accounting entry would be a $220 debit to Accounts payable, a $200 credit to Purchase returns and allowances, and a $20 credit to GST Clearing.
B) The accounting entry would be a $220 debit to Purchases and a $220 credit to Accounts payable.
C) The accounting entry would be a $200 debit to Accounts payable and a $200 credit to Purchases.
D) The accounting entry would be a $200 debit to Purchase returns and allowances, a $20 debit to GST Clearing and a $220 credit to Accounts payable.