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 are the major assets? Liabilities?

Rocky Mountain Chocolate Factory nc Preparing Financial Statements Rocky Mountain Chocolate Factory, Inc., incorporated in 1982, is an international franchiser, confectionery mamufacturer and retail operator in the United States, Canada and the United Arab Emirates. The Company manufactures an extensive line of premium chocolate candies and other confectionery products. The Company's revenues are derived from three principal sources: sales to franchisees and others of chocolates and other onfectionery products mamjactred by the Company the collection of nitial franchise fees and royalties from franchisees' sales; and sales at Company-owned stores of chocolates and other confectionery products. (Source. company Web site.) Learning Objectives Understand how economic events are recorded in the financial statements. Appreciate the linkages between the balance sheet and the income statement. Be able to record transactions and adjustments in journal entry form. are a simple set of financial statements Distinguish between cash and accrual-basis accounting. To complete this case you need to develop a simple spreadsheet. The structure of the spreadsheet folows after the case questions The spreadsheet does not use debits and credits, per se. However, you should understand that debits (credits) increase (decrease) asset and expense accounts. In contrast, credits (debits) increase (decrease) liability, owners' equity, and revenue accounts. If you wish to check that each transaction balances in terms of debits and credits, simply define a row beneath the list of accounts such that Assets Liabilities + Owners' Equity + (Revenues Expenses). In other words, in each column, verify that Assets Liabilities -OB - Revenues + Expenses 0. This will ensure that the sum of the debits equals the sum of the credits. Enter the opening (i.e., February 28, 2009) and ending (i.e, February 28, 2010) actual balance sheet or income statement balances into the accounts on your spreadsheet. Asset and expense accounts have debit balances, liability, shareholders' equity, and sales accounts should have credit balances. The income statement accounts should have opening balances of $0. All figures are in thousands of dollars. A series of transactions has already been entered into the spreadsheet (see b. 11 later in the case) The column labeled "Unadjusted trial balance" should be defined so that each cell equals the sum of the opening balance and the transactions n hat row. Each trial balance sum should be either a net debit or a net credit. The column labeled "Pre-closing balances" should be defined so that cach cell equals the sum of the "Unadjusted trial balance" and the adjusting journal entries for each row. The column labeled "Post-closing balances" should be defined so that each cell equals the "Pre-closing balance" plus the closing entry in that row The last column (ie., February 28, 2010 F/IS figures) serves as a check that you get to the correct year-end balances. The row labeled "Retained Earnings" should be used only for the dividend entry (#10), the larg aggregate entry (#11), and the closing entry. All transaction and adjusting joumal entries that affect income statement accounts should be posted to the income statement (revemue and expense) accounts and then closed to the row labeled "Retained earnings" in part i of the case. J/E J/E J/E J/E J/E 2/28/10 Unadjusted Trial Balance #16 Actual (ClosingEnding F/S Balances Financial Statement Item #12 #13 #14 #15 Entry Cash and cash equivalents Accounts receivable Notes receivable,current Inventories Deferred income taxes Other Pr Notes receivable less current portion Goodwil.net Intangible assets.net Other Accounts payable Accrued salaries and wages Other accrued e Dividend payable Deferred income Deferred Income Taxes Common stock Additional paid-in c Retained earnings Sales Franchise and royalty fees Cost of sales Franchise costs Sales &marketin Generaland administrative Retail operatin Depreciation and amortization Interest income Income Tax E 1.253,947 4,229,733 1.253,947 4,229,733 4,064.611 369,197 224,378 5.253,598 124.452 1,046,944 183,135 91,057 1,074,643 423,789 531,941 598,986 142,000 827,700 179.696 7,311,280 5,751,017 4,064.611 369,197 224,378 5,253,598 124,452 1,046,944 183,135 91,057 1,074,643 423,789 531,941 598,986 142,000 827,700 179,696 7,311,280 5,751,017 and E Net J/E J/E J/E J/E J/E 2/28/10 Unadjusted Trial Balance #16 Actual (ClosingEnding F/S Balances Financial Statement Item #12 #13 #14 #15 Entry Cash and cash equivalents Accounts receivable Notes receivable,current Inventories Deferred income taxes Other Pr Notes receivable less current portion Goodwil.net Intangible assets.net Other Accounts payable Accrued salaries and wages Other accrued e Dividend payable Deferred income Deferred Income Taxes Common stock Additional paid-in c Retained earnings Sales Franchise and royalty fees Cost of sales Franchise costs Sales &marketin Generaland administrative Retail operatin Depreciation and amortization Interest income Income Tax E 1.253,947 4,229,733 1.253,947 4,229,733 4,064.611 369,197 224,378 5.253,598 124.452 1,046,944 183,135 91,057 1,074,643 423,789 531,941 598,986 142,000 827,700 179.696 7,311,280 5,751,017 4,064.611 369,197 224,378 5,253,598 124,452 1,046,944 183,135 91,057 1,074,643 423,789 531,941 598,986 142,000 827,700 179,696 7,311,280 5,751,017 and E Net Rocky Mountain Chocolate Factory nc Preparing Financial Statements Rocky Mountain Chocolate Factory, Inc., incorporated in 1982, is an international franchiser, confectionery mamufacturer and retail operator in the United States, Canada and the United Arab Emirates. The Company manufactures an extensive line of premium chocolate candies and other confectionery products. The Company's revenues are derived from three principal sources: sales to franchisees and others of chocolates and other onfectionery products mamjactred by the Company the collection of nitial franchise fees and royalties from franchisees' sales; and sales at Company-owned stores of chocolates and other confectionery products. (Source. company Web site.) Learning Objectives Understand how economic events are recorded in the financial statements. Appreciate the linkages between the balance sheet and the income statement. Be able to record transactions and adjustments in journal entry form. are a simple set of financial statements Distinguish between cash and accrual-basis accounting. To complete this case you need to develop a simple spreadsheet. The structure of the spreadsheet folows after the case questions The spreadsheet does not use debits and credits, per se. However, you should understand that debits (credits) increase (decrease) asset and expense accounts. In contrast, credits (debits) increase (decrease) liability, owners' equity, and revenue accounts. If you wish to check that each transaction balances in terms of debits and credits, simply define a row beneath the list of accounts such that Assets Liabilities + Owners' Equity + (Revenues Expenses). In other words, in each column, verify that Assets Liabilities -OB - Revenues + Expenses 0. This will ensure that the sum of the debits equals the sum of the credits. Enter the opening (i.e., February 28, 2009) and ending (i.e, February 28, 2010) actual balance sheet or income statement balances into the accounts on your spreadsheet. Asset and expense accounts have debit balances, liability, shareholders' equity, and sales accounts should have credit balances. The income statement accounts should have opening balances of $0. All figures are in thousands of dollars. A series of transactions has already been entered into the spreadsheet (see b. 11 later in the case) The column labeled "Unadjusted trial balance" should be defined so that each cell equals the sum of the opening balance and the transactions n hat row. Each trial balance sum should be either a net debit or a net credit. The column labeled "Pre-closing balances" should be defined so that cach cell equals the sum of the "Unadjusted trial balance" and the adjusting journal entries for each row. The column labeled "Post-closing balances" should be defined so that each cell equals the "Pre-closing balance" plus the closing entry in that row The last column (ie., February 28, 2010 F/IS figures) serves as a check that you get to the correct year-end balances. The row labeled "Retained Earnings" should be used only for the dividend entry (#10), the larg aggregate entry (#11), and the closing entry. All transaction and adjusting joumal entries that affect income statement accounts should be posted to the income statement (revemue and expense) accounts and then closed to the row labeled "Retained earnings" in part i of the case. J/E J/E J/E J/E J/E 2/28/10 Unadjusted Trial Balance #16 Actual (ClosingEnding F/S Balances Financial Statement Item #12 #13 #14 #15 Entry Cash and cash equivalents Accounts receivable Notes receivable,current Inventories Deferred income taxes Other Pr Notes receivable less current portion Goodwil.net Intangible assets.net Other Accounts payable Accrued salaries and wages Other accrued e Dividend payable Deferred income Deferred Income Taxes Common stock Additional paid-in c Retained earnings Sales Franchise and royalty fees Cost of sales Franchise costs Sales &marketin Generaland administrative Retail operatin Depreciation and amortization Interest income Income Tax E 1.253,947 4,229,733 1.253,947 4,229,733 4,064.611 369,197 224,378 5.253,598 124.452 1,046,944 183,135 91,057 1,074,643 423,789 531,941 598,986 142,000 827,700 179.696 7,311,280 5,751,017 4,064.611 369,197 224,378 5,253,598 124,452 1,046,944 183,135 91,057 1,074,643 423,789 531,941 598,986 142,000 827,700 179,696 7,311,280 5,751,017 and E Net J/E J/E J/E J/E J/E 2/28/10 Unadjusted Trial Balance #16 Actual (ClosingEnding F/S Balances Financial Statement Item #12 #13 #14 #15 Entry Cash and cash equivalents Accounts receivable Notes receivable,current Inventories Deferred income taxes Other Pr Notes receivable less current portion Goodwil.net Intangible assets.net Other Accounts payable Accrued salaries and wages Other accrued e Dividend payable Deferred income Deferred Income Taxes Common stock Additional paid-in c Retained earnings Sales Franchise and royalty fees Cost of sales Franchise costs Sales &marketin Generaland administrative Retail operatin Depreciation and amortization Interest income Income Tax E 1.253,947 4,229,733 1.253,947 4,229,733 4,064.611 369,197 224,378 5.253,598 124.452 1,046,944 183,135 91,057 1,074,643 423,789 531,941 598,986 142,000 827,700 179.696 7,311,280 5,751,017 4,064.611 369,197 224,378 5,253,598 124,452 1,046,944 183,135 91,057 1,074,643 423,789 531,941 598,986 142,000 827,700 179,696 7,311,280 5,751,017 and E Net