Financial Accounting

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Perpetual Inventory System Purchase Return


BIGCupStore uses the perpetual inventory system for its inventory related transactions. The company has the following transactions during October, 2015.

10/1 Purchases cup inventory on account from CupORMug for \$7,500, term 1/10, n/30, FOB destination
10/3 Returns \$500 of the cups purchased on 1/1 because these cups were different from those on the order form

On 10/3, the company returns the product. Which account should the company debit when journalizing the transaction?