Hope Corp. sells a franchise for an initial fee of P1,400,000. A down payment of P400,000 is required, with the balancecovered by a P1,000,000, 10% note payable in five equal annual installments.If all the material services have been performed and collectability of the notes is reasonably assured, but the refundperiod has not yet expired, what journal entry is needed to record the transaction?A. Cash400,000Notes Receivable1,000,000Franchise Fees1,400,000В. Cash400,000Notes Receivable1,000,000Unearned Franchise Fees1,400,000C. Cash400,000Notes Receivable1,000,000Franchise Fees400,000Unearned Franchise Fees1,000,000D. Cash400,000Notes Receivable1,000,000Franchise Fees1,000,000Unearned Franchise Fees400,000

When the capability of note is reasonably assured, the journal entry would be debit of cash and…

Answered: Hope Corp. sells a franchise for an…

Hope Corp. sells a franchise for an initial fee of P1,400,000. A down payment of P400,000 is required, with the balance covered by a P1,000,000, 10% note payable in five equal annual installments.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: A franchisor, charges an initial franchise fee of P920,000, with P200,000 paid when the agreement is…

A: Solution: The amount of revenue from franchise fees is = Present value of franchise payments

Q: The ABC Company has contracted to make the following payments: 500,000 immediately; 50,000 at the…

A: Year Cash flow PV 8% Present value 0 500,000 1.4693 734664 1 50,000 1.3604 68024.45 2…

Q: White Airlines sold a used jet aircraft to Brown Company for P800,000, accepting a five-year 6% note…

A: Fixed assets are those assets which are held by the business for longer period of time. These assets…

Q: Sandhill Company sells land with a book value of $165625 to Teal Mountain Corp. in exchange for a…

A: Zero coupon bonds are those which don't pay any interest during their lifetime. The bond value gets…

Q: The contract rec much interest w places. Leave n Payment number 0 1 2 3 4 6 7 599

A: Loan installment is that which is paid by borrower to lender for a specified period of time. This…

Q: Each of ABC's 12 new franchisee contracted to pay an initial franchise fee of P50,000. By December…

A: Franchise Business: One of the options that brands have used for expansion in any country is the…

Q: Cleopatra Ltd offers $400 million of debentures, which is payable on application. The Interest rate…

A: Debentures means an instrument which is issued by company to an outsider acknowledging the debt due…

Q: Southtown Corporation purchased equipment and in exchange signed a two-year promissory note.The note…

A: Present value of note = Value of note * Present value of $1 table factor (6%, 2 periods)

Q: The bank has granted an overdraft facility to ABC company for the period. The overdraft facility…

A: The objective of the question is to calculate the effective annual cost of using the overdraft…

Q: Help Chancellor Limited sells an asset with a $3.0 million fair value to Sophie Incorporated. Sophie…

A: Sale value (S) = $3,000,000Interest rate (r) = 0.06Number of payments (n) = 6Annual payment = ?Since…

Q: Omega Chemicals Ltd. took a $440,000 two-year note receivable from a customer in connection with a…

A: Price of the bond = c × F × (1 − (1 + r)-t)/r+F(1 + r)t C=Interest Rate F= Face Value r=Market…

Q: On 1/1/19, Lantana Loan Co., a calendar-year company, accepts a 5%, $500,000 three-year loan that…

A: Bonds/Notes are the instruments/ securities issued by the companies to raise funds for the company…

Q: Valley Produce received $50,000 in vendor financing at 7.8% compounded semiannually for the purchase…

A: Loan installment is that which is paid by borrower to lender for a specified period of time. This…

Q: anatee Corporation bought new equipment and agreed to pay for it in five equal annual installments…

A: Solution: Cost of equipment is present value of annual equal installment discounted as prevailing…

Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Hope Corp. sells a franchise for an initial fee of P1,400,000. A down payment of P400,000 is required, with the balance
covered by a P1,000,000, 10% note payable in five equal annual installments.
If all the material services have been performed and collectability of the notes is reasonably assured, but the refund
period has not yet expired, what journal entry is needed to record the transaction?
A. Cash
400,000
Notes Receivable
1,000,000
Franchise Fees
1,400,000
В. Cash
400,000
Notes Receivable
1,000,000
Unearned Franchise Fees
1,400,000
C. Cash
400,000
Notes Receivable
1,000,000
Franchise Fees
400,000
Unearned Franchise Fees
1,000,000
D. Cash
400,000
Notes Receivable
1,000,000
Franchise Fees
1,000,000
Unearned Franchise Fees
400,000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

On 12-31-21, Austin entered into an agreement that required Austin to pay a supplier $4,000 every year on 12-31 until 12-31-30. The agreement required Austin to make the first annual payment on 12-31-24. Assume the market rate of interest for Austin is 6%. As of 12-31-21 what was the present value of Austin's obligation?
Hemingway Company purchases equipment by issuing a 7-year, $350,000 non-interest-bearing note, when the market rate for this type of note is 10%. Hemingway will pay off the note with equal payments to be made at the end of each year. Required: Prepare the journal entry to record Hemingway’s acquisition of the equipm
Vd
At the beginning of 2021, VHF Industries acquired a machine with a fair value of $6,774,420 by issuing a four-year, noninterest-bearing note in the face amount of $8 million. The note is payable four annual installments of $2 million at the end of each year. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. What is the effective rate of interest implicit in the agreement? 2. to 4. Prepare the necessary journal entries. When recording the issuance of the installment note record it at its net book value in a single note payable (or receivable) account (no Discount). 5. Suppose the market value of the machine was unknown at the time of purchase, but the market rate of interest for notes of similar risk was 12%. Prepare the journal entry to record the purchase of the machine. Complete this question by entering your answers in the tabs below. Required 1 Required 2 to 4 Interest rate What is the effective…
Able Inc. sells a new product with a 2-year warranty. The company estimates that during the two years, the costs and related probabilities are: Year 1: $10,000 (20 %) and $20,000 (80 %), Year 2 $15,000 (50 %) and $25,000 (50 %). The company's effective interest rate is 4%. Assuming the warranty costs are settled at the end of Years 1 and 2, calculate the estimated warranty liability using the expected cash flow method.