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 26, it paid the full amount due. The correct journal entry to record the merchandise return on August 11 is:
A. Debit Accounts Payable $1,500; credit Cash $1,500.
B. Debit Accounts Payable $1,500; credit Purchase Returns $1,500.
C. Debit Accounts Payable $1,500; credit Merchandise Inventory $1,500.
D. Debit Merchandise Inventory $1,500; credit Cash $1,500.
E. Debit Merchandise Inventory $1,500; credit Sales Returns $1,500.
Answer: C
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