A company purchased $10,600 of merchandise on January 5 with terms 3/10, n/30. On January 7, it returned $500 worth of merchandise. On January 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 January 12 is:
A. Debit Merchandise Inventory $1900; credit Cash $1900.
B. Debit Accounts Payable $10,100; credit Merchandise Inventory, $303; credit Cash $9797.
C. Debit Accounts Payable $10,600; credit Cash $10,600.
D. Debit Cash $10,100; credit Accounts Payable $10,100.
E. Debit Accounts Payable $10,600; credit Merchandise Inventory $318; credit Cash $10,282.
Answer: B
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