Reference no: EM132650951
Listed below and on the next page, in random order, are the balance sheet accounts and related ending balances of the Starbucks Corporation as of December 31, 2017:
Income Taxes Payable 247,000
Prepaid Expenses 31,000
Cash Surrender Value of Life Insurance 89,000
Preference Share 400,000
Premium on Bonds Payable 48,000
Cash and Cash Equivalents 116,000
Property, Plant, & Equipment 2,293,000
Accounts Payable 580,000
Ordinary Share 628,000
Retained Earnings 1,234,000
Land held for Future Use 195,000
Trading Securities 160,000
Bonds Payable 800,000
Share Premium - Ordinary 303,000
Inventories 985,000
Accounts Receivable 323,000
Patents 182,000
Held to Maturity Securities - XYZ Bonds 250,000
Share Premium - Preference 234,000
Unearned Revenues 62,000
Provision for Product Warranty 73,000
Allowance for Bad Debts 15,000
Additional information:
a. The company uses control accounts for inventories and property, plant, and equipment and lists the latter at its book value.
b. The straight-line method is used to depreciate buildings, machinery, and equipment based upon their cost and estimated residual values and lives. A breakdown of property, plant, and equipment shows the following: Land at a cost of P320,000; Buildings at a cost of P1,824,000 and a book value of P1,202,000; Machinery at a cost of P639,000 and related Accumulated Depreciation of P186,000, and Equipment (40% depreciated) at a cost of P530,000. Included in Machinery is a unit costing P320,000 and with accumulated depreciation of P80,000 included in the balance of Accumulated Depreciation, that qualifies as "Held for Sale". This unit of asset has an estimated sales price of P250,000; cost of P40,000 is expected to be incurred on its sale. The sale is highly probable and is expected to be consummated in May 2018.
c. Patents are amortized on a straight-line basis directly to the patents account. The cost of the patent is P200,000 while its accumulated amortization is P18,000.
d. Inventories are listed at the lower of cost and net realizable value using an average cost. The inventories include Raw Materials of P222,000, Goods in Process of P347,000, and Finished Goods of P416,000.
e. The ordinary share has a P10 par value per share, 120,000 are authorized, 62,800 shares have been issued.
f. Preference share has a P100 par value per share, 10,000 shares are authorized, 4,000 shares have been issued.
g. Trading Securities are listed above at market values; their aggregate cost is P150,000.
h. The Bonds Payable mature on December 31, 2020.
i. The company attaches a one-year warranty on all products it sells.
Required:
Question 1: Prepare the December 31, 2017 balance sheet of the Starbucks Corporation (including appropriate notes and parenthetical notations).