Question 2: Under the perpetual inventory system, the normal balance for Merchandise Inventory is:

A. a debit. B. zero. C. a credit. D. It does not have a normal balance.

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Question 3: Tim returned $600 of merchandise, purchased on account, before he paid for the merchandise. Tim uses the perpetual inventory system. The entry to record the return is to:

A. debit to Accounts Payable for $600; credit Sales for $600. B. debit Merchandise Inventory for $600; credit Accounts Payable for $600. C. debit Accounts Payable for $600; credit Merchandise Inventory for $600. D. debit Merchandise Inventory for $600; credit Sales for $600.

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Question 7: Excalibur Company uses the perpetual inventory method. The entry to record returned merchandise, originally purchased on credit, to Vine Company is:

A. debit Accounts Payable, Vine Company; credit Supplies. B. debit Accounts Payable, Vine Company; credit Merchandise Inventory. C. debit Merchandise Inventory; credit Accounts Receivable, Vine Company in the general ledger. D. debit Merchandise Inventory; credit Accounts Payable, Vine Company.