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What effect will the return of merchandise to the supplier

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Reference no: EM13510057

The Martin Company had the following transactions. (Assume the perpetual inventory method is used.)

Event a: The Company purchased $5,000 of merchandise on account under terms 2/10, n/30.

Event b: The Company returned $600 of merchandise to the supplier before payment was made.

Event c: The liability was paid within the discount period.

Event d: All of the merchandise purchased was sold for $6,500 cash.

What effect will the return of merchandise to the supplier have on the accounting equation?

a. Assets and equity are reduced by $600.
b. Assets and liabilities are reduced by $570.
c. Assets and liabilities are reduced by $600.
d. Liabilities and equity are reduced by $600.

Reference no: EM13510057

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