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 16, it paid the full amount due. The correct journal entry to record the purchase on August 7 is:
A. Debit Merchandise Inventory $9,750; credit Accounts Payable $9,750.
B. Debit Merchandise Inventory $9,750; credit Cash $9,750.
C. Debit Merchandise Inventory $9,750; credit Sales Returns $1,500; credit Cash $8,250.
D. Debit Accounts Payable $8,250; debit Purchase Returns $1,500; credit Merchandise Inventory $9,750.
E. Debit Accounts Payable $9,750; credit Merchandise Inventory $9,750.
Answer: A
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