A company purchased $2900 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $750 worth of merchandise. On July 12, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 12 is:
A. Debit Accounts Payable $2150; credit Merchandise Inventory $43; credit Cash $2107.
B. Debit Accounts Payable $2900; credit Cash $2900.
C. Debit Merchandise Inventory $2150; credit Cash $2150.
D. Debit Cash $2150; credit Accounts Payable $2150.
E. Debit Accounts Payable $2150; credit Cash $2150.
Answer: A
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