Starbucks is a coffee company—a big coffee company. Duringa 10-year period, the number of Starbucks locations grew from 165 to over 5,800 stores—an average increase of 43 percent every year. The following is adapted from a recent Starbucks annual report. Starbucks’ year-end is September 30 and dollars arereported in thousands.
Cash $ 174,500 Accounts payable $462,600
Accounts receivable 97,500 Short-term bank loans 74,900
Inventories 263,200 Long-term debt 5,100
Other current assets 312,100 Other long-term liabilities 23,500
Property, plant, and equipment 1,265,800 Contributed capital930,300
Other long-term assets 179,500 Retained earnings 796,200
Assume that the following events occurred in the following quarter, which ended December 31:
a. Paid $10,400 cash for additional other long-term assets.
b. Issued additional shares of stock for $5,300 incash.
c. Purchased property, plant, and equipment; paid$11,800 in cash and signed additional longterm loans for$8,900.
d. Sold, at cost, other long-term assets for $3,000cash.
e. Conducted negotiations to purchase a coffee farm,which is expected to cost $7,400.
1. Prepare journal entries to recordtransactions a–e.
2. Create T-accounts for each of the accounts on the balance sheet and enter the balances at the end of Septemberas beginning balances for the October 1–December 31quarter.
3. Enter the effects of the transactions inT-accounts (including referencing) and determine the December 31balances.
4. Explain your response to evente.
5. Prepare a classified balance sheet atDecember 31.
6. As of December 31, has the financing for the investment in assets made by Starbucks primarily come from liabilities or stockholders’ equity?
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