A company that uses the net method of recording purchases and a perpetual inventory system purchased $2100 of merchandise on July 5 with terms 3/10, n/30. On July 7, it returned $300 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 Accounts Payable $2100; credit Cash $2100.
B. Debit Merchandise Inventory $1800; credit Cash $1800.
C. Debit Cash $1800; credit Accounts Payable $1800.
D. Debit Accounts Payable $1746; debit Discounts Lost $54; credit Cash $1800.
E. Debit Accounts Payable $1800; credit Merchandise Inventory $54; credit Cash $1746.
Answer: D
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