Starbucks is a coffee company—a big coffee company. During a ten-year period, the number of Starbucks locations grew from 165 to over 8,800 stores in fifty countries. Assume the following is from Starbucks’ annual report for the year ended September 30, 2017, and dollars are reported in thousands. 

Assume that the following events occurred in the following quarter, which ended December 31, 2017. Dollars are in thousands. 

a. Paid $10,000 cash for additional other long-term assets 

b. Issued additional shares for $5,100 in cash

c. Purchased property, plant, and equipment; paid $11,200 in cash and signed additional long-term loans for $9,500

d. Sold, at cost, other long-term assets for $6,000 cash

e. Conducted negotiations to purchase a coffee farm, which is expected to cost $8,400 

Required: 

1. Analyze transactions (a) through (e) to determine their effects on the accounting equation. Use the format shown in the demonstration case. 

2. Record the transaction effects determined in requirement 1 using journal entries. 

3. Summarize the journal entry effects from requirement 2 using T-accounts. Use the September 2017 ending balances (reported above) as the beginning balances for the October–December 2017 quarter. 

4. Explain your response to the event (e). 

5. Prepare a classified balance sheet at December 31, 2017. 

6. As of December 31, 2017, has the financing for the investment in assets made by Starbucks primarily come from liabilities or from shareholders’ equity?

Transcribed Image Text:

Cash $ 269,800 Accounts Payable $ 324,900 Accounts Receivable 329,500 Short-Term Bank Loans 1,864,800 Inventories 692,800 Long-Term Debt 549,600 Other Current Assets 455,900 Other Long-Term Liabilities 442,400 Property, Plant, and Equipment 2,956,400 Contributed Capital 40,100 Other Long-Term Assets 968,200 Retained Earnings 2,450,800