A company that uses the net method of recording purchases and a perpetual inventory system purchased $2,600 of merchandise on July 5 with terms 3/10, n/30. On July 7, it returned $600 worth of merchandise. On July 28, it paid the full amount due. The correct journal entry to record the payment on July 28 is:

Multiple Choice

• Debit Merchandise Inventory $2,000; credit Cash $2,000.

• Debit Accounts Payable $2,600; credit Cash $2,600.

• Debit Accounts Payable $1,940; debit Discounts Lost $60; credit Cash $2,000.

• Debit Cash $2,000; credit Accounts Payable $2,000.

• Debit Accounts Payable $2,000; credit Merchandise Inventory $60; credit Cash $1,940.