Buds Video Store Co. is owned an operated by Jim Budeski. The following is an except from

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Bud’s Video Store Co. is owned an operated by Jim Budeski. The following is an except from a conversation between Jim Budeski and Ann Pavik, the chief accountant for Bud’s Video Store

Jim; Ann, I’ve got a question about this recent balance sheet.

Ann: Sure, what’s your question?

Jim; Well, as you known, I’m applying for a bank load to finance our new store in Coronado, and I noticed that the accounts payable are listed as $235,000.

Ann: That’s right, Approximately $190,000 of that represents amount due our suppliers, and the remainder is miscellaneous payables to creditors for utilities, office equipment supplies, etc.

Jim; That’s what I thought, But as you known, we normally receive a 2% discount from our suppliers for earlier payment, and we always try to take the discount.

Ann: That’s right. I can’t remember the last time we missed a discount.

Jim; 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 $186,200, rather than $190,000. Every little bit helps. You never know. It might make the difference between getting the loan and not.

How would you respond to Jim Budeski’s request?


Accounts Payable
Accounts payable (AP) are bills to be paid as part of the normal course of business.This is a standard accounting term, one of the most common liabilities, which normally appears in the balance sheet listing of liabilities. Businesses receive...
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Financial and Managerial Accounting

ISBN: 978-0538480895

11th Edition

Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren

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