Question

Starbucks is a coffee company—a big coffee company. During a 10-year period, the number of Starbucks locations in China grew from 24 to over 1,000. The following is adapted from Starbucks’s annual report for the year ended October 2, 2016, and dollars are reported in millions.

Accounts Payable	$	5,020
Accounts Receivable		595
Cash		2,910
Common Stock		420
Equipment		4,060
Intangible Assets		3,200
Inventory		1,460
Notes Payable (long-term)		2,010
Notes Payable (short-term)		1,620
Prepaid Rent		605
Retained Earnings		4,490
Short-Term Investments		730

Assume that the following events occurred in the following quarter, which ended December 31, 2016. Dollars are in millions.

1. Paid $1,350 cash for additional intangible assets.
2. Issued additional shares of common stock for $10,700 in cash.
3. Purchased equipment; paid $4,700 in cash and signed additional long-term loans for $9,600.
4. Paid $870 cash for accounts payable owed at October 2.
5. Conducted negotiations to purchase a coffee farm, which is expected to cost $8,600.

4. Summarize the journal entry effects from part 3 using T-accounts. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).)

Answer 1

T-Accounts
Cash					Accounts Receivable
Beg. Bal.	$2,910	$1,350	a)		Beg. Bal.	$595
b)	$10,700	$4,700	c)
		$870	d)
End. Bal.					End. Bal.
Inventory					Prepaid Rent
Beg. Bal.	$1,460				Beg. Bal.	$605
End. Bal.					End. Bal.
Equipment					Short-Term Investments
Beg. Bal.	$4,060				Beg. Bal.	$730
c)	$14,300
End. Bal.					End. Bal.
Accounts Payable					Intangible Assets
Beg. Bal.		$5,020			Beg. Bal.	$3,200
d)	$870				a)	$1,350
End. Bal.					End. Bal.
Notes Payable (short-term)					Notes Payable (long-term)
Beg. Bal.		$1,620			Beg. Bal.		$2,010
							$9,600	c)
End. Bal.					End. Bal.
Common Stock					Retained Earnings
Beg. Bal.		$420			Beg. Bal.		$4,490
		$10,700	b)
End. Bal.					End. Bal.
e) It is not a financial transaction so it is not recorded in the books.