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?
Page 164 Survey of Accounting Excercise A4-2. It needs to be a good paragraph, not one sentence. I do not think one sentence is quite sufficient for a discussion post.