Starfruit Inc., headquartered in Ridgway, Colorado, designs, manufactures, and m

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).

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.

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

Explanation / Answer

T accounts:

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

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