Otto Corp. purchased merchandise during 2020 on credit for $700,000; terms 2/10, n/30. All of the liability was paid within the discount period except for $100,000.The $100,000 remaining balance was paid within the 30-day credit period.

Required:

Assuming that the net method is used for recording purchases, prepare the entries for the

purchase and two subsequent payments. Please explain each step in detail.