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A merchandiser returned inventory worth $2,000 that was purchased on account. Under the periodic inventory system, the journal entry to record such returns would include:
A. a debit to Purchases for $2,000 and a credit to Accounts Payable for $2,000.
B. a debit to Purchase Returns and Allowances for $2,000 and a credit to Accounts Payable for $2,000.
C. a debit to Accounts Payable for $2,000 and a credit to Purchases for $2,000.
D. a debit to Accounts Payable for $2,000 and a $2,000 credit to Purchase Returns and Allowances.
The comparative financial statements of Optical Solutions Inc. are as follows. The market price of Optical Solutions Inc. common stock was $60.00 on December 31, 2010.
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Accrued salaries of $4,950 owed to employees for December 30 and 31 are not considered in preparing the financial statements for the year ended December 31.
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