Gail Fisher signed a five-year franchise agreement that gave her the exclusive rights to sell Yummy Yoghurt

Question:

Gail Fisher signed a five-year franchise agreement that gave her the exclusive rights to sell Yummy Yoghurt products in Cloverdale, British Columbia. The terms of the agreement require Gail to pay the franchisor an ongoing royalty of 5% of net sales and contribute 2.5% to the sales and marketing fund, both payable on the 15th of the month following. Gail opened the Yummy Yoghurt franchise on January 1; her sales for the first three months of operations were $50,000, $40,000, and $60,000, respectively. 


Required: 

Prepare journal entries to record the accrual and payment of the franchise and marketing fees.

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