2. Using their past historical experience, the customer credit risk and an applying the specific identification method is how Starbucks’ allowance for doubtful accounts is computed. The allowance for doubtful accounts for Starbucks reported at year of October 2, 2011 and October 3, 2010 was both reported at $3.3 million.
3. The acid- test ratio computed for October 2, 2011 came out to be 1.17. This means that if all the current liabilities came and were due immediately, then Starbucks would not have any problem in paying them.
4. The accounts receivable turnover is 33.95 times for the year 2011 as of October 2. …show more content…
Days’ sales in receivables calculated for October 2, 2011 was noted at 10.75 days.
6. Starbucks would be able to pay off any current liabilities easier than Green Mountain Coffee Roasters. Starbucks collects its average accounts receivable more frequently than Green Mountain. Starbucks will collect their average accounts receivable in fewer days.
Chapter 9: Financial Statement Case 9-1 on p. 601
1. The Starbucks Corporation is using straight-line depreciation for their financial statements and for their tax purposes I believe they use double declining depreciation.
2. 523.3 million is the amount of depreciation and amortization expense for the year ending October 2, 2011
3. $274.4 million is how much Starbucks’ fixed asset cash purchases were during the ending year October 2, 2011. Yes, they did record their proceeds from the sale of fixed assets. They recorded the sales of two office building for $30.2