ACCT1101 - Introduction to Financial Accounting Chapter 2 P2-5 Recording Transactions, Preparing Journal Entries, Posting to T-Accounts, Preparing the Balance Sheet, and Evaluating the Current Ratio P2-5 Recording Transactions, Preparing Journal Entries, Posting to T-Accounts, Preparing the Balance Sheet, and Evaluating the Current Ratio LO2-2, 2-4, 2-5 Apple Inc., headquartered in Cupertino, California, 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 Apple's (simplified) balance sheet from a recent year (fiscal year ending on the last Saturday of September). APPLE INC. Consolidated Balance Sheet September 30, 2017 (dollars in millions) ASSETS Current assets: Cash $ 20,289 Short-term investments 53,892 Accounts receivable 17,874 Inventories 4.855 $ 20.289 53,892 17,874 4,855 31,735 128,645 194,714 33,783 18,177 $375,319 APPLE INC. Consolidated Balance Sheet September 30, 2017 (dollars in millions) ASSETS Current assets: Cash Short-term investments Accounts receivable Inventories Other current assets Total current assets Long-term investments Property, plant, and equipment, net Other noncurrent assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable Accrued expenses Unearned revenue Short-term notes payable Total current liabilities Long-term debt Other noncurrent liabilities Total liabilities Shareholders' equity: Common stock ($0.00001 par value) Additional paid-in capital Retained earnings Total shareholders' equity Total liabilities and shareholders' equity $ 49.049 25.744 7.548 18,473 100,814 97,207 43.251 241.272 1 35,866 98,180 134,047 $375,319 Source: Apple Inc. ACCT1101 - Introduction to Financial Accounting Chapter 2 Page 95 Assume that the following transactions in millions) occurred during the next fiscal year (ending on September 29, 2018): a. Borrowed $18,266 from banks due in two years. b. Purchased additional investments for $21,000 cash; one-fifth were long term and the rest were short term. c. Purchased property, plant, and equipment; paid $9.571 in cash and signed a short-term note for $1.410. d. Issued additional shares of common stock for $1,469 in cash; total par value was $1 and the rest was in excess of par value. e. Sold short-term investments costing $18,810 for $18,810 cash. f. Declared $11,126 in dividends to be paid at the beginning of the next fiscal year. Required: 1. Prepare a journal entry for each transaction. Use the account titles in the Apple balance sheet and show answers in millions of dollars. 2. Create T-accounts for each balance sheet account and include the September 30, 2017, balances: create a new account, Dividends Payable, with a $0 beginning balance. Post each journal entry to the appropriate T-accounts. 3. Prepare a trial balance for the period ended September 29, 2018. 4. Prepare a classified balance sheet for Apple at September 29, 2018, based on these transactions. 5. Compute Apple's current ratio for the year ending on September 29, 2018. Round your answer to two decimal places. What does this suggest about the company