The financial statements of Starbucks are presented in Appendix A at the end of this book.

\section*{Instructions}

(a) Using the consolidated income statement and balance sheet, identify items that may result in adjusting entries for prepayments.

(b) Using the consolidated income statement, identify two items that may result in adjusting entries for accruals.

(c) What was the amount of depreciation expense for 1996 and 1995? Where was accumulated depreciation reported? Do you have any suggestions for improving Starbucks presentation of accumulated depreciation?

(d) What has been the trend since 1994 for interest expense and interest income?

(e) What was the cash paid for interest during 1996 reported at the bottom of the Consolidated Statement of Cash Flows? What was interest expense for 1996? Where is the remainder presumably reported in the balance sheet?