Reference no: EM131767456
Problem - The Eclipse Video Store Co. is owned and operated by Jared Helms. The following is an excerpt from a conversation between Jared Helms and Allison Fain, the chief accountant for The Eclipse Video Store:
Jared: Allison, I've got a question about this recent balance sheet.
Allison: Sure, what's your question?
Jared: Well, as you know, I'm applying for a bank loan to finance our new store in Winterville, and I noticed that the accounts payable are listed as $85,000.
Allison: That's right. Approximately $78,000 of that represents amounts due our suppliers, and the remainder is miscellaneous payables to creditors for utilities, office equipment, supplies, etc.
Jared: That's 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.
Allison: That's right. I can't remember the last time we missed a discount.
Jared: Well, in that case, it seems to me the accounts payable should be listed minus the 2% discount. Let's list the accounts payable due suppliers as $76,440, rather than $78,000. Every little bit helps. You never know. It might make the difference between getting the loan and not.
How would you respond to Jared Helm's request?