On January 1, 20x4 Ethelmea Dulva Dairy Treats, Inc. entered into a franchise agreement company allowing...
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On January 1, 20x4 Ethelmea Dulva Dairy Treats, Inc. entered into a franchise agreement company allowing the company to do business under Ethelmea Dulva Dairy Treats's name. Ethelmea Dulva Dairy Treats had performed all required services by January 1, 20x4, and the franchisee paid the initial franchise fee of P560.000 in full on that date. The franchise agreement specifies that the franchisee must pay a continuing franchise fee of P48,000 annually, of which 20% must be spent on advertising by Ethelmea Dulva Dairy Treats. What entry should Ethelmea Dulva Dairy Treats make on January 1, 20x4 to record receipt of the initial franchise fee and the continuing franchise fee for 20x4? a. Cash....... 608,000 Franchise Fee Revenue.. Unearned franchise revenue b. Cash...... Unearned franchise revenue. c. Cash...... Franchise revenue. Unearned franchise revenue. Revenue from Continuing Franchise Fees. d. Prepaid advertising. Notes receivable... C. d. 608,000 P745,872 P920,000 608,000 9.600 608,000 560,000 48,000 608,000 Franchise revenue Revenue from Continuing Franchise Fees.... Unearned Franchise Fees........ 26. Mean Dones and Jeremie Jane Roldan Inc. charges an initial franchise fee of P920,000, with P200,000 paid when the agreement is signed and the balance in five annual payments. The present value of the future payments, discounted at 10%, is P545,872. The franchisee has the option to purchase P120,000 of equipment for P96,000, franchise operations already started. The amount of revenue from franchise fees is: a. P200,000 b. P721,872 560,000 38,400 9,600 560,000 48,000 9,600 On January 1, 20x4 Ethelmea Dulva Dairy Treats, Inc. entered into a franchise agreement company allowing the company to do business under Ethelmea Dulva Dairy Treats's name. Ethelmea Dulva Dairy Treats had performed all required services by January 1, 20x4, and the franchisee paid the initial franchise fee of P560.000 in full on that date. The franchise agreement specifies that the franchisee must pay a continuing franchise fee of P48,000 annually, of which 20% must be spent on advertising by Ethelmea Dulva Dairy Treats. What entry should Ethelmea Dulva Dairy Treats make on January 1, 20x4 to record receipt of the initial franchise fee and the continuing franchise fee for 20x4? a. Cash....... 608,000 Franchise Fee Revenue.. Unearned franchise revenue b. Cash...... Unearned franchise revenue. c. Cash...... Franchise revenue. Unearned franchise revenue. Revenue from Continuing Franchise Fees. d. Prepaid advertising. Notes receivable... C. d. 608,000 P745,872 P920,000 608,000 9.600 608,000 560,000 48,000 608,000 Franchise revenue Revenue from Continuing Franchise Fees.... Unearned Franchise Fees........ 26. Mean Dones and Jeremie Jane Roldan Inc. charges an initial franchise fee of P920,000, with P200,000 paid when the agreement is signed and the balance in five annual payments. The present value of the future payments, discounted at 10%, is P545,872. The franchisee has the option to purchase P120,000 of equipment for P96,000, franchise operations already started. The amount of revenue from franchise fees is: a. P200,000 b. P721,872 560,000 38,400 9,600 560,000 48,000 9,600
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Solution The correct answer is c Cash 608000 Franchise revenue 56... View the full answer
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