The Video Store Co. is owned and operated by Todd Shovic. The following is an excerpt from a conversation between Todd Shovic and Susan Mastin, the chief accountant for The Video Store.
Todd: Susan, I’ve got a question about this recent balance sheet.
Susan: Sure, what’s your question?
Todd: Well, as you know, I’m applying for a bank loan to finance our new store in Three Forks, and I noticed that the accounts payable are listed as $110,000.
Susan: That’s right. Approximately $90,000 of that represents amounts due our suppliers, and the remainder is miscellaneous payables to creditors for utilities, office equipment, supplies, etc.
Todd: 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.
Susan: That’s right. I can’t remember the last time we missed a discount.
Todd: 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 $88,200, rather than $90,000. Every little bit helps. You never know. It might make the difference between getting the loan and not.
How would you respond to Todd Shovic’s request?