$($P$-28)$ A company purchased $$1,800$ of merchandise on July $5$ with terms $\frac{2}{10},\frac{n}{30}.$ On

July $7,$ it returned $$200$ worth of merchandise. On July $28,$ it paid the full amount

due. Assuming the company uses a perpetual inventory system, and records

purchases using the gross method, the correct journal entry to record the

merchandise return on July $7$ is:

Debit Merchandise Inventory $$1,600$; credit Cash $$1,600.$

Debit Merchandise Inventory $$200$; credit Accounts Payable $$200.$

Debit Merchandise Inventory $$200$; credit Sales Returns $$200.$

Debit Accounts Payable $$200$; credit Merchandise Inventory $$200.$

Debit Accounts Payable $$1,800$; credit Purchase Returns $$200$; credit

Merchandise Inventory $$1,600.$