Journal entries for Purchased on account Merchandise Inventory to be held for resale.
1.(2/25/2009) Purchased on account $300,000 Merchandise Inventory to be held for resale. All purchases are recorded net of the 2% discount offered by the vendor. Any discounts not eve Allowance for Uncollectible Accounts naturally taken by the firm are recognized as interest expense. Shipping costs of $880 were paid by the seller.
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2.(3/1/2009) Paid the balance due on the Merchandise Inventory purchase in Transaction 1 within the discount period.
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