Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The correct journal entry to record the payment on August 16 is:

Multiple Choice

• Debit Merchandise Inventory $8,250; credit Cash $8,250.

• Debit Cash $8,250; credit Accounts Payable $8,250.

• Debit Accounts Payable $8,250; credit Merchandise Inventory $82.50; credit Cash $8,167.50.

• Debit Accounts Payable $9,750; credit Merchandise Inventory $97.50; credit Cash $9,652.50.

• Debit Accounts Payable $8,167.50; credit Cash $8,167.50.