Kitty Clips Acquired $2,800 Worth of Merchandise Inventory on Account

Multiple Choice

Kitty Clips acquired $2,800 worth of merchandise inventory on account.Upon inspection,the company discovered that $400 worth of the merchandise inventory was defective.Kitty Clips returned the defective merchandise inventory and received full credit.The effect of the return transaction on Kitty Clips would be to

A) decrease the merchandise inventory account by $400 and increase the accounts payable account by $400.
B) decrease the merchandise inventory account by $400 and decrease the accounts payable account by $400.
C) decrease the merchandise inventory account by $400 and increase the accounts receivable account by $400.
D) decrease the merchandise inventory account by $400 and decrease the accounts receivable account by $400.
E) Because the merchandise inventory was never used,Kitty Clips would not record the return of the merchandise inventory.