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Problem 1: Part of the merchandise purchased for cash at an earlier time is now being returned. Which of the following is the correct journal entry FOR THE BUYER for this return, assuming the seller grants cash refunds and a perpetual inventory system is used?
A) A debit to Cash and a credit to Purchases
B) A debit to Cash and a credit to Merchandise Inventory
C) A debit to Purchases Returns and Allowances and a credit to Cost of Goods Sold
D) A debit to Merchandise Inventory and a credit to Cash
E) None of the above
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