Question: Rustic Furniture Co is owned and operated by Cam Pfeifer

Rustic Furniture Co. is owned and operated by Cam Pfeifer. The following is an excerpt from a conversation between Cam Pfeifer and Mitzi Wheeler, the chief accountant for Rustic Furniture Co.
Cam: Mitzi, I've got a question about this recent balance sheet.
Mitzi: Sure, what's your question?
Cam: Well, as you know, I'm applying for a bank loan to finance our new store in Garden Grove, and I noticed that the accounts payable are listed as $320,000.
Mitzi: That's right. Approximately $275,000 of that represents amounts due our suppliers, and the remainder is miscellaneous payables to creditors for utilities, office equipment, supplies, etc.
Cam: 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.
Mitzi: That's right. I can't remember the last time we missed a discount.
Cam: 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 $314,500, rather than $320,000. Every little bit helps. You never know. It might make the difference between getting the loan and not.
How would you respond to Cam Pfeifer's request?




Sale on SolutionInn
Sales1
Views299
Comments
  • CreatedFebruary 28, 2014
  • Files Included
Post your question
5000