A company that uses the net method of recording purchases and a perpetual inventory system purchased $2300 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $450 worth of merchandise. On July 28, it paid the full amount due. The correct journal entry to record the payment on July 28 is:
A. Debit Merchandise Inventory $1850; credit Cash $1850.
B. Debit Accounts Payable $1813; debit Discounts Lost $37; credit Cash $1850.
C. Debit Cash $1850; credit Accounts Payable $1850.
D. Debit Accounts Payable $2300; credit Cash $2300.
E. Debit Accounts Payable $1850; credit Merchandise Inventory $37; credit Cash $1813.
Answer: B
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