Analyze the following T-account in the ledger of Gibbs Company

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Analyze the following T-account in the ledger of Gibbs Company.

Merchandise Inventory 5,000 400

If $5,000 in the Inventory account represents merchandise purchased from a supplier, we can assume the company uses the

- perpetual inventory method and $400 may represent cost of goods sold.

- perpetual inventory method and $400 may represent a purchase return.

- perpetual inventory method and $400 may represent a purchase allowance.

- All of these answer choices are correct.