Help Save& Exit Sul Assume the perpetual inventory method is used 23 purchased $

Question

Help Save& Exit Sul Assume the perpetual inventory method is used 23 purchased $12 200 of merchandise on account under terms 2/10, n/30. 2) The company returned $1,700 of merchandise to the supplier before payment was made. R m23) The liability was paid within the discount period 04) All of the merchandise purchased was sold for $18,400 cash What effect will the return of merchandise to the supplier have on the accounting equation? Multiple Choice Assets and liabilities are reduced by $1700 Assets and liabilities are reduced by $1,666

Explanation / Answer

Answer is Assets and liabilities reduced by $ 1700.

Explanation:

Inventory has been returned to supplier means the balance of inventory (assets) has been reduced by $1700 in the books and liability of Accounts payable by $1700 shall also be reduced in the books.

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