Darlington Company entered into the following business events during its first month of operations. The company uses the perpetual inventory system. 1) The company purchased $13,200 of merchandise on account under terms 3/10, n/30. 2) The company returned $2,700 of merchandise to the supplier before payment was made. 3) The liability was paid within the discount period. 4) All of the merchandise purchased was sold for $20,400 cash. What effect will the return of merchandise to the supplier in event (2) have on Darlington's financial statements? Multiple Choice Assets and liabilities decrease by $2,700. Assets and stockholders' equity decrease by $2,700. Assets and liabilities decrease by $2619
Darlington Company entered into the following business events during its first month of operations. The company uses the perpetual inventory system. 1) The company purchased $13,200 of merchandise on account under terms 3/10, n/30. 2) The company returned $2,700 of merchandise to the supplier before payment was made. 3) The liability was paid within the discount period. 4) All of the merchandise purchased was sold for $20,400 cash. What effect will the return of merchandise to the supplier in event (2) have on Darlington's financial statements? Multiple Choice Assets and liabilities decrease by $2,700. Assets and stockholders' equity decrease by $2,700. Assets and liabilities decrease by $2619
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Darlington Company entered into the following business events during its first month of operations. The company uses the perpetual inventory system.
1) The company purchased $13,200 of merchandise on account under terms 3/10, n/30.
2) The company returned $2,700 of merchandise to the supplier before payment was made.
3) The liability was paid within the discount period.
4) All of the merchandise purchased was sold for $20,400 cash.
What effect will the return of merchandise to the supplier in event (2) have on Darlington's financial statements?
Multiple Choice
O
Assets and liabilities decrease by $2,700.
Assets and stockholders' equity decrease by $2,700.
Assets and liabilities decrease by $2,619.
None. It is an asset exchange transaction.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5d7c6df9-9072-40bc-ad85-7ace55fd8504%2F30c06d4a-0b39-4df3-b6dc-4b2b407a6c5a%2F1jepvdp_processed.png&w=3840&q=75)
Transcribed Image Text:Darlington Company entered into the following business events during its first month of operations. The company uses the perpetual inventory system.
1) The company purchased $13,200 of merchandise on account under terms 3/10, n/30.
2) The company returned $2,700 of merchandise to the supplier before payment was made.
3) The liability was paid within the discount period.
4) All of the merchandise purchased was sold for $20,400 cash.
What effect will the return of merchandise to the supplier in event (2) have on Darlington's financial statements?
Multiple Choice
O
Assets and liabilities decrease by $2,700.
Assets and stockholders' equity decrease by $2,700.
Assets and liabilities decrease by $2,619.
None. It is an asset exchange transaction.
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