A company purchased $2,700 of merchandise on October 5 with terms 3/7, n/60. On October 7, it returned $700 worth of merchandise. On October 28, 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 purchase on October 5 is: Debit Merchandise Inventory $2,700; credit Accounts Payable $2,700... Debit Accounts Payable $2,700; credit Merchandise Inventory $2,700. Debit Merchandise Inventory $2,000; credit Cash $2,000. Debit Accounts Payable $2,700; credit Purchase Returns $700; credit Merchandise Inventory $2,000. Debit Merchandise Inventory $2,700; credit Sales Returns $700; credit Cash $2,000.