A company that uses the net method of recording purchases and a perpetual inventory system purchased $2500 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $550 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 $1911; debit Discounts Lost $39; credit Cash $1950.
B. Debit Merchandise Inventory $1950; credit Cash $1950.
C. Debit Cash $1950; credit Accounts Payable $1950.
D. Debit Accounts Payable $2500; credit Cash $2500.
E. Debit Accounts Payable $1950; credit Merchandise Inventory $39; credit Cash $1911.
Answer: A
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