Valley, Inc., purchased inventory costing $75,000. Terms of the purchase were 4/10,n/30.Valley uses a perpetual inventory system. In order to take advantage of the cash discount, Valley borrowed $60,000 from Downtown Second National, signing a 2-month, 9% note. The bank requires monthly interest payments. Make the entries to record the following:
1. Initial purchase of inventory on account
2. Payment to the supplier within the discount period
3. Loan from the bank
4. First month’s payment to the bank
5. Second and final payment to the bank