On Dec. 7, Toys R Fun purchased $1,000 of merchandise with terms of 2/10,n/30. If payment is made on December 16, demonstrate the required journal entry for Toys R Fun to record the payment under the perpetual inventory system.

A. Debit Accounts Payable $1,000; credit Cash $1,000; credit Purchase Discounts $20.

B. Debit Accounts Payable $1,000; credit Cash $980; credit Merchandise Inventory $20.

C. Debit Accounts Payable $1,000; credit Cash $1,000.

D. Debit Merchandise Inventory $20; debit Cash $980; credit Accounts Payable $1,000.