TB MC Qu$.05-100($Static$)$ A company purchased...

A company purchased $$1,800$ of merchandise on July $5$ with terms $\frac{2}{10},\frac{n}{30}.$ On July $7,$ it returned $$200$ worth of merchandise. On July $28,$ 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 merchandise return on July $7$ is:

Multiple Choice

Debit Merchandise Inventory $$1,600$; credit Cash $$1,600,$

Debit Merchandise Inventory $$200$; credit Accounts Payable $$200$

Debit Merchandise Inventory $$200$; credit Sales Returns $$200.$

Debit Accounts Payable $$200$; credit Merchandise Inventory $$200.$

Debit Accounts Payable $$1,800$; credit Purchase Returns $$200$; credit Merchandise Inventory $$1,600.$