The encore video store co is owned and operated by sergio

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This week%u2019s discussion focuses on Activity 4-2 located on page 164 of your textbook which reads as follows:

The Encore Video Store Co. is owned and operated by Sergio Alonzo. The following is an excerpt from a conversation between Sergio Alonzo and Suzie Engel, the chief accountant for The Encore Video Store:

Sergio: Suzie, I%u2019ve got a question about this recent balance sheet.Suzie: Sure, what%u2019s your question?

Sergio: Well, as you know, I%u2019m applying for a bank loan to finance our new store in Cherokee, and I noticed that the accounts payable are listed as $120,000.

Suzie: That%u2019s right. Approximately $100,000 of that represents amounts due our suppliers, and the remainder is miscellaneous payables to creditors for utilities, office equipment, supplies, etc.

Sergio: That%u2019s what I thought. But as you know, we normally receive a 2% discount from our suppliers for earlier payment, and we always try to take the discount.

Suzie: That%u2019s right. I can%u2019t remember the last time we missed a discount.

Sergio: Well, in that case, it seems to me the accounts payable should be listed minus the 2% discount. Let%u2019s list the accounts payable due suppliers as $98,000, rather than $100,000. Every little bit helps. You never know. It might make the difference between getting the loan and not.How would you respond to Sergio Alonzo%u2019s request?

Reference no: EM13582989

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