Flapper Jack's Pancake Restaurants Inc. sells franchises for an initial fee of $38,000 plus operating fees of $700 per month. The initial fee covers site selection, training, computer and accounting software, and on-site consulting and troubleshooting, as needed, over the first five years. On March 15, 2020, Tim Cruise signed a franchise contract, paying the standard $6,400 down with the balance due over five years with interest. Assuming that the initial services to be performed by Flapper Jack's subsequent to the signing are substantial and that collection of the receivable is reasonably assured, the journal entry required at signing would include a credit to: Multiple Choice O Deferred revenue for $38,000. Deferred revenue for $31,600. Franchise fee revenue for $38,000. Franchise fee revenue for $6,400.

Flapper Jack's Pancake Restaurants Inc. sells franchises for an initial fee of $38,000 plus operating fees of $700 per month. The initial fee covers site selection, training, computer and accounting software, and on-site consulting and troubleshooting, as needed, over the first five years. On March 15, 2020, Tim Cruise signed a franchise contract, paying the standard $6,400 down with the balance due over five years with interest. Assuming that the initial services to be performed by Flapper Jack's subsequent to the signing are substantial and that collection of the receivable is reasonably assured, the journal entry required at signing would include a credit to: Multiple Choice O Deferred revenue for $38,000. Deferred revenue for $31,600. Franchise fee revenue for $38,000. Franchise fee revenue for $6,400.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

Flapper Jack's Pancake Restaurants Inc. sells franchises for an initial fee of $38,000 plus operating fees of $700
per month. The initial fee covers site selection, training, computer and accounting software, and on-site consulting
and troubleshooting, as needed, over the first five years. On March 15, 2020, Tim Cruise signed a franchise
contract, paying the standard $6,400 down with the balance due over five years with interest.
Assuming that the initial services to be performed by Flapper Jack's subsequent to the signing are substantial and
that collection of the receivable is reasonably assured, the journal entry required at signing would include a credit
to:
Multiple Choice
O
Deferred revenue for $38,000.
Deferred revenue for $31,600.
Franchise fee revenue for $38,000.
Franchise fee revenue for $6,400.

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