Journal entries for paid balance due on the Merchandise Inventory purchase.
1.(3/1/2009) Goochland issued $500,000 of 10-year bonds that will pay a stated annual rate of interest of 6% semi-annually until maturity. Comparable bonds are yielding 8% annual interest, so Goochland sells the bonds for a cash amount that will yield an 8% effective interest return.
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2.3/1/2009) Purchased on account $200,000 Merchandise Inventory to be held for resale. All purchases are recorded net of the 2% discount offered by the vendor. Any discounts not eventually taken by the firm are recognized as interest expense.
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3.(3/8/2009) Paid the balance due on the Merchandise Inventory purchase in Transaction 19 within the discount period.
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