Home Brew Supplies Inc

Multiple Choice

Home Brew Supplies Inc.uses the perpetual inventory method.Home Brew requested a price reduction from a vendor because the merchandise that was purchased did not meet specifications.The vendor sent Home Brew a credit memorandum for $2,300 to resolve the issue.How would Home Brew record this transaction?

A) Debit Cost of Goods Sold for $2,300 and credit Accounts Payable for $2,300.
B) Debit Merchandise Inventory for $2,300 and credit Accounts Payable for $2,300.
C) Debit Accounts Payable for $2,300 and credit Merchandise Inventory for $2,300.
D) Debit Purchase Returns and Allowances for $2,300 and credit Accounts Payable for $2,300.
E) Debit Accounts Payable for $2,300 and credit Purchase Returns and Allowances for $2,300.