Question

Starfruit Inc., headquartered in Ridgway, Colorado, designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players and sells a variety of related software and services. The following is Starfruit's (simplified) balance sheet from a recent year (fiscal year ending on the last Saturday of September).

STARFRUIT INC. CONSOLIDATED BALANCE SHEET September 27, 2014 (dollars in millions)
ASSETS
Current assets:
Cash	$	14,034
Short-term investments		11,385
Accounts receivable		17,693
Inventories		2,135
Other current assets		24,152
Total current assets		69,399
Long-term investments		131,812
Property, plant, and equipment, net		20,886
Other noncurrent assets		12,684
Total assets	$	234,781
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	30,582
Accrued expenses		18,691
Unearned revenue		8,605
Short-term notes payable		6,389
Total current liabilities		64,267
Long-term debt		29,363
Other noncurrent liabilities		28,214
Total liabilities		121,844
Stockholders’ equity:
Common stock ($0.00001 per value)		1
Additional paid-in capital		25,412
Retained earnings		87,524
Total stockholders’ equity		112,937
Total liabilities and shareholders' equity	$	234,781

Assume that the following transactions (in millions) occurred during the next fiscal year (ending on September 26, 2015):

Borrowed $18,302 from banks due in two years.

Purchased additional investments for $24,300 cash; one-fifth were long term and the rest were short term.

Purchased property, plant, and equipment; paid $9,608 in cash and signed a short-term note for $1,445.

Issued additional shares of common stock for $1,505 in cash; total par value was $1 and the rest was in excess of par value.

Sold short-term investments costing $19,043 for $19,043 cash.

Declared $11,160 in dividends to be paid at the beginning of the next fiscal year.

a) Create T-accounts for each balance sheet account. Post each transaction to the appropriate T-accounts

b) Prepare a balance sheet from the T-account ending balances for Starfruit at September 26, 2015, based on these transactions.

Answer 1

STARFRUIT INC.
CONSOLIDATED BALANCE SHEET
September 26, 2015
(dollars in millions)
ASSETS
Current assets:
Cash	$	18,976
Short-term investments		11,782
Accounts receivable		17,693
Inventories		2,135
Other current assets		24,152
Total current assets		74,738
Long-term investments		1,36,672
Property, plant, and equipment, net		31,939
Other noncurrent assets		12,684
Total assets	$	2,56,033
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	30,582
Accrued expenses		18,691
Unearned revenue		8,605
Dividends payable		11,160
Short-term notes payable		7,834
Total current liabilities		76,872
Long-term debt		47,665
Other noncurrent liabilities		28,214
Total liabilities		1,52,751
Stockholders’ equity:
Common stock ($0.00001 per value)		2
Additional paid-in capital		26,916
Retained earnings		76,364
Total stockholders’ equity		1,03,282
Total liabilities and shareholders' equity	$	2,56,033

T accounts:

Long term debt
Account		Debit amount	Account		Credit amount
			By	Balance b/d	29363
To	Balance c/d	47665	By	Cash	18302
		47665			47665
Cash
Account		Debit amount	Account		Credit amount
To	Balance b/d	14034	By	short-term investments	19440
To	Long term debt	18302	By	long-term investments	4860
To	common stock	1	By	property plant and equipment	9608
To	additional paid in capital	1504
To	short-term investments	19043
			By	Balance c/d	18976
		52884			52884
	short-term investments
Account		Debit amount	Account		Credit amount
To	Balance b/d	11385	By	cash	19043
To	Cash	19440
			By	Balance c/d	11782
		30825			30825
long-term investments
Account		Debit amount	Account		Credit amount
To	Balance b/d	131812
To	Cash	4860
			By	Balance c/d	136672
		136672			136672
Property plant and equipment
Account		Debit amount	Account		Credit amount
To	Balance b/d	20886
To	Cash	9608
To	short-term notes payable	1445
			By	Balance c/d	31939
		31939			31939
short-term notes payable
Account		Debit amount	Account		Credit amount
			By	Balance b/d	6389
To	Balance c/d	7834	By	Property plant and equipment	1445
		7834			7834
common stock
Account		Debit amount	Account		Credit amount
			By	Balance b/d	1
To	Balance c/d	2	By	cash	1
		2			2
additional paid in capital
Account		Debit amount	Account		Credit amount
			By	Balance b/d	25412
To	Balance c/d	26916	By	Cash	1504
		26916			26916
Retained earnings
Account		Debit amount	Account		Credit amount
To	Dividends payable	11160	By	Balance b/d	87524
To	Balance c/d	76364
		87524			87524
Dividends payable
Account		Debit amount	Account		Credit amount
			By	Retained earnings	11160
To	Balance c/d	11160
		11160			11160