A company purchased $3,800 of merchandise on July 5 with terms 3/10, n/30. On July 7, it returned $900 worth of merchandise. On July 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 July 12 is:

Multiple Choice

• Debit Merchandise Inventory $2,900; credit Cash $2,900.

• Debit Cash $2,900; credit Accounts Payable $2,900.

• Debit Accounts Payable $2,900; credit Merchandise Inventory $87; credit Cash $2,813.

• Debit Accounts Payable $3,800; credit Cash $3,800.

• Debit Accounts Payable $2,900; credit Cash $2,900.