c. Concepts a. Prior to examining the company's actual balance sheet, read the description of Rocky Mountain Chocolate Factory, above. What accounts do you expect to see on the balance sheet? Which accounts constitute the major assets? Which accounts constitute the major liabilities? Process b. Prepare journal entries, as needed, for each of the following fiscal 2010 "transactions." All figures are in thousands of dollars. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. The company purchased $7,500,000 of raw material inventory on account. "On account" means that their suppliers have not yet been paid. That is, Rocky Mountain Chocolate has an additional "Account Payable" for the inventory purchase. During the year, the company incurred $6,000,000 of factory wages. When wages relate to the production of a company's inventory, the wage costs are added to the inventory account. For now, assume that the wages have not yet been paid. The company sold inventory that cost $14,000,000 for a total of $22,000,000. Of that, $17,000,000 was received in cash and $5,000,000 was on account (that is, added to accounts receivable). The company paid $8,200,000 to suppliers for inventory it had previously purchased on account. That is, it paid $8,200,000 of accounts payable. The company collected $4,100,000 of accounts receivable. The company incurred sales and marketing expenses of $1,505,431, general and administrative expenses of $2,044,569, and retail operating expenses of $1,750,000. They paid $2,000,000 in cash and $3,300,000 was added to other accrued expenses. The company paid $6,423,789 to employees for wages that had been previously accrued. Rocky Mountain Chocolate Factory received $125,000 in cash from new franchisees. The company must provide services to the franchisees over the next five years. As such, the fees are considered deferred income. The company paid $498,832 for new property and equipment. During the year, the company declared $2,407,167 of dividends on its common shares. They paid $2,403,458 during the fiscal year. The difference, $3,709, will be paid in the following fiscal year. Many other transactions were recorded during the year. They are summarized in the spreadsheet. Do not attempt to interpret individual entries as many involve offsetting debits and credits and the resulting values are net figures. Post the journal entries for the transactions to the spreadsheet. d. Prepare an unadjusted trial balance from the spreadsheet. Hint: the unadjusted balance for retained earnings is $3,343,850. e. Based on the transactions you recorded in parts b and c, list at least three adjustments or reclassifications that might need to be made prior to preparing the final financial statements. Prepare journal entries for the following adjustments. 12. Rocky Mountain Chocolate Factory employees took a physical count of inventory on February 28, 2010. The cost of inventory in the company's possession on that date was $3,281,447.) 13. Depreciation and amortization expense on property and equipment was $698,580 for the fiscal year.