Each of Potter Pie Co.'s 21 new franchisee contracted to pay an initial franchise fee of P30,000. By December 31, 2020, each franchisee had paid a non-refundable P10,000 fee and signed a note to pay P10,000 principal plus the market rate of interest on December 31, 2021 and December 31, 2022. Experience indicates that one franchise will default on the additional payments. Services for the initial franchise fee will be performed in 2021. What amount of net unearned franchise fees would Potter report at December 31, 2020? a.610,000 b.600,000 c.630,000 d.400,000
Each of Potter Pie Co.'s 21 new franchisee contracted to pay an initial franchise fee of P30,000. By December 31, 2020, each franchisee had paid a non-refundable P10,000 fee and signed a note to pay P10,000 principal plus the market rate of interest on December 31, 2021 and December 31, 2022. Experience indicates that one franchise will default on the additional payments. Services for the initial franchise fee will be performed in 2021. What amount of net unearned franchise fees would Potter report at December 31, 2020? a.610,000 b.600,000 c.630,000 d.400,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Each of Potter Pie Co.'s 21 new franchisee contracted to pay an initial franchise fee of P30,000. By December 31, 2020, each franchisee had paid a non-refundable P10,000 fee and signed a note to pay P10,000 principal plus the market rate of interest on December 31, 2021 and December 31, 2022. Experience indicates that one franchise will default on the additional payments. Services for the initial franchise fee will be performed in 2021. What amount of net unearned franchise fees would Potter report at December 31, 2020?
a.610,000
b.600,000
c.630,000
d.400,000
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