Wok this Way is a famous dance studio in downtown Toronto. They are very popular and...

 

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Wok this Way is a famous dance studio in downtown Toronto. They are very popular and seeking to grow their busienss. As such, Wok This Way has signed a franchise agreement on May 31, 2027 to allow a franchisee to operate downtown Montreal for a 10-year period. The agreement requires the franchisee to payWok This Way $167,000 initially, and a royalty of 51% of sales revenue thereafter. Sales at this franchise location for the first year are $20 million from when the franchise opened on June 1, 20274. The management of Wok This Way estimates that the value of services rendered to this franchisee-such as location and demographic analysis, initial staffing and training represents 97% of the intial fee paid. The remaining fee relates to ongoing services to be provided to the franchisee over the term of the franchise agreement. REQUIRED: How much revenue should be recorded in May? Wok this Way is a famous dance studio in downtown Toronto. They are very popular and seeking to grow their busienss. As such, Wok This Way has signed a franchise agreement on May 31, 2027 to allow a franchisee to operate downtown Montreal for a 10-year period. The agreement requires the franchisee to payWok This Way $167,000 initially, and a royalty of 51% of sales revenue thereafter. Sales at this franchise location for the first year are $20 million from when the franchise opened on June 1, 20274. The management of Wok This Way estimates that the value of services rendered to this franchisee-such as location and demographic analysis, initial staffing and training represents 97% of the intial fee paid. The remaining fee relates to ongoing services to be provided to the franchisee over the term of the franchise agreement. REQUIRED: How much revenue should be recorded in May?

Answer rating: 100% (QA)

To determine the revenue that should be recorded in May for Wok This Way related to the franchise a... View the full answer