Question

Jones Co. returned merchandise purchased from Smith Co. The journal entry to record the return of merchandise by Jones, under a perpetual inventory system, would be
debit Accounts Payable—Jones, credit Merchandise Inventory.
debit Accounts Receivable—Jones, credit Merchandise Inventory.
debit Sales Returns and Allowances, credit Merchandise Inventory.None of these choices are correct.A

Answer 1

Answer:

debit Accounts Payable—Jones, credit Merchandise Inventory.

Explanation:

When inventory is purchased on account, it increases the merchandise inventory balance along with the liability towards the payment.

When some inventory out of the above is returned, it decreases the inventory, and thus accordingly it is credited by the same.

Further it decreases the accounts payable by the same as such amount is not required to be paid.

Therefore, correct option is

Statement A