A company with excess capacity must decide between scrapping or reworking units that do not pass inspection. The company has 16,000 defective units that cost $5.80 per unit to manufacture. The units can be a) sold as is for $2.60 each, or b) reworked for $4.50 each and then sold for the full price of $8.40 each. What is the incremental income from selling the units as scrap and reworking and selling the units

Assume the perpetual inventory method is used. 1) the company purchased $12,500 of merchandise on account under terms 2/10, n/30. 2) the company returned $1,200 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 $18,800 cash. what effect will the return of merchandise to the supplier have on the accounting equation?