Sandhill Traders uses a perpetual inventory system. The following purchase transactions occurred in May 2026.
| Date | Event |
|---|
| May 2 | Purchased merchandise on account, $20,000, terms 2/10, n/30. |
| May 5 | Returned $2,000 of defective merchandise to the supplier. |
| May 11 | Paid the balance due, within the discount period. |
Required: Prepare the journal entries. Under a perpetual system, purchase returns and purchase discounts reduce the Merchandise Inventory account directly.