Chapter 6, Problem 10C

Analyzing Starbucks’s Cash and Receivables Disclosures

Obtain Starbucks’s 2017 annual report either using the “Investor Relations” portion of its web site (do a Web search for Starbucks investor relations) or go to http*//www.sec.gov and click “Search for company filings” under “Filings and Forms (EDGAR).” '

Required:

1. 1. (a) What were the cash and cash equivalents at the end of 2017? What does the company classify as cash equivalents? (b) Why are cash and cash equivalents combined into one amount on the balance sheet?
2. 2. What were the trade accounts receivable (net) at the end of 2017? At the end of 2016?

   Given Starbucks’s large volume of sales, why isn’t the receivables larger?

3. 3. What amount of its accounts receivable does Starbucks believe is uncollectible?
4. 4. What method does Starbucks use to estimate its allowance for doubtful accounts? Is this method allowable by GAAP?