Jubilee Feed and Supply Company buys on term, of 1/10 net 30, but it has not been taking discounts and has actually been paying in 60 rather than 30 days. Assume that the accounts payable are recorded at full costs, not net of discounts. Jubilee's statement of financial position follows: (thousands of shillings). ASSETS Cash Accounts receivable Inventory Total Current Assets Kshs. LIABILITIES EQUITY Kshs. Kshs.5,000 500 500 12,500 Total Current Liabilities Ksh.6.000 Kshs.500 Accounts payable 4,500 Notes payable Accruals Property, plant and Equipment Total Assets Z.500 Long-term debt 20,000 Shareholders' equity 1,500 12.500 Total Liabilities & Equity 20,000 Now, Jubilee's supplies are threatening to stop shipment unless the company begins making prompt payments (that is, paying in 30 days or less). The firm can borrow on a 1-year note (call this a current liability) fron its bank at a rate of 15%, with a 20% compensating balance required. Jubilee's kshs, 500,000of cash is needed for transactions; it cannot be used as part of the compensating balance) Required: a) How large would the accounts payable balance be if Jubilee takes discounts? If it does not take discounts and pays in 30 days (10 marks) How large must the bank loan be if Jubilee takes discounts? If Jubilee doesn't take discounts? b) (5 marks) c) Assume that Jubilee foregoes the discount and borrows the amount needed to become current on its payables. Constant a Proforma statement of financial position based on this decision (5 marks) d) Now assume that the Kshs.5,000,000 shows on the statement of financial position is recorded net of discounts. How much would Jubilee have to pay its suppliers to reduce its accounts payable to Kshs2,500,000? If Jubilee's tax rate is 30%,what is the effect on its net income due to the lost discount when it reduces its accounts payable to Kshs.2,500,000?How much would Jubilee have to borrow