Juniper Company Uses a Perpetual Inventory System and the Gross

Multiple Choice

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 26, it paid the full amount due. The correct journal entry to record the merchandise return on August 11 is:

A) Debit Accounts Payable $1,500; credit Purchase Returns $1,500.
B) Debit Accounts Payable $1,500; credit Cash $1,500.
C) Debit Accounts Payable $1,500; credit Merchandise Inventory $1,500.
D) Debit Merchandise Inventory $1,500; credit Cash $1,500.
E) Debit Merchandise Inventory $1,500; credit Sales Returns $1,500.