JANE creates a franchise for the sale of a particular product. Jane incurs P600,000 initial direct costs for each franchise granted. At December 31, 2016, Jane granted the following people franchise that have open accounts with Jane. ANNA BETY CHERRY DANA Cash paid (down payment) Note unpaid (face P1,000,000) Services completed Probability of collection Continuing franchise fee Period of refund 200,000 700,000 200,000 400,000 200,000 910,000 200,000 550,000 25% 10% 95% 100% Likely Likely 1% of NI Unlikely Unlikely 1% of NI 1% of NI 1% of NI 1/31/2017 2/28/2017 12/30/2016 12/30/2016 What is the total revenue to be recognized by JANE on December 31, 2016?

JANE creates a franchise for the sale of a particular product. Jane incurs P600,000 initial direct costs for each franchise granted. At December 31, 2016, Jane granted the following people franchise that have open accounts with Jane. ANNA BETY CHERRY DANA Cash paid (down payment) Note unpaid (face P1,000,000) Services completed Probability of collection Continuing franchise fee Period of refund 200,000 700,000 200,000 400,000 200,000 910,000 200,000 550,000 25% 10% 95% 100% Likely Likely 1% of NI Unlikely Unlikely 1% of NI 1% of NI 1% of NI 1/31/2017 2/28/2017 12/30/2016 12/30/2016 What is the total revenue to be recognized by JANE on December 31, 2016?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Jear's Finess Club provides monthly memberships as well as personal training sessions. The personal trainers eam 50% of the revenue for all personal training sessions. The Feness Club also sels nutrition products. Jean's general ledger accounts indicate the following for the year. The front desk staff wages expense remains the same throughout the year Account Membership revenue Personal training revenue Product sales Amount $143.000 $76.000 $60.000 $35.000 $13,000 OA $214,000 OB. $393,000 OC. $181,000 OD. $287.000 Account Personal trainer wages expense Space rental expense Straight line depreciation expense Rental insurance expense Cost of product sold Front desk staff wages expense If a contribution margin income statement is prepared for the year, what is operating income? Anount $11,000 $4,000 $3,000
On Jan. 2, 2016, Gino Services Inc. signed an agreement authoring Triple 8 Company to operate as a franchisee over a 20-year period for an initial franchise fee of 50,000 received when the agreement was signed. Triple 8 commenced operations on July 1, 2016, at which date all of the initial services required of Gino had been performed. The agreement also provides that Triple 8 must pay annually to Gino a continuing franchise fee equal to 5% of their gross sales. Triple 8 reported gross sales of 400,000 for 2016. For the year ended Dec. 31, 2016, how much should Gino record as revenue from franchise fees with respect to the triple 8 franchise? a. P70,000 b. P50,000c. P45,000 d. P22,500
R.S. Sarap Restaurant sold a fastfood restaurant franchise to R.S.Takaw Corporation. The saleagreement signed on January 2, 2018 called for a P80,000 down payment plus two P10,000annual payments representing the value of initial franchise services rendered by R.S.Sarap. Thepresent value of two annual payments appropriately discounted at 10% is P17,355. In addition, theagreement required the franchisee to pay 5% of its gross revenues to the franchisor; this wasdeemed sufficient to cover the cost and provide a reasonable profit margin on continuing franchiseservices to be performed by R.S. Sarap. The restaurant opened early in 2018 and its sales for the yearamounted to P500,000.R.S. Sarap Restaurant's 2018 total revenue from the franchisee will be:
Service Industry AccountingThe Spectrum Fitness Club charges a nonrefundable annual membership fee of $1,200 for its services. For this fee, each member received a fitness evaluation (value $200), a monthly magazine (annual value $25), and two hours’ use of the equipment each week (annual value $1,100). Each of the three elements of the annual membership can be purchased separately. The initial direct costs to obtain the membership are $180. The direct cost of the fitness evaluation is $100, and the monthly direct costs to provide the other services are estimated to be $25 per person. Give the journal entries to record the transactions in 2019 relative to a membership sold on May 1, 2019.
On October 1, 2018, the Submarine Sandwich Company entered into a franchise agreement with an individual.In exchange for an initial franchise fee of $300,000, Submarine will provide initial services to the franchisee toinclude assistance in design and construction of the building, help in training employees, and help in obtainingfinancing. Ten percent of the initial franchise fee is payable on October 1, 2018, with the remaining $270,000payable in nine equal annual installments beginning on October 1, 2019. These installments will include interestat an appropriate rate. The franchise opened for business on January 15, 2019.Required:Assume that the initial services to be performed by Submarine Sandwich subsequent to October 1, 2018, are substantial and that collectibility of the installment receivable is reasonably certain. Substantial performance of theinitial services is deemed to have occurred when the franchise opened. Prepare the necessary journal entries forthe following dates…
E2
Each of ABC's 12 new franchisee contracted to pay an initial franchise fee of P50,000. By December 31,2021, each franchisee had paid a non-refundable P5,000 fee and signed a note to pay P20,000 principal plus interest rate of 10% on December 31, 2022 and December 31, 2023. Experience indicates that three franchises will default on the additional payments. Service for the initial franchise fee will be performed in 2022. What amount of franchise revenue would ABC recognize on December 31, 2021?
ABC sells franchise arrangement throughout La Trinidad and Itogon. Under a franchise agreement, ABC receives 1,000,000 in exchange for satisfying the following separate performance obligations: franchisees have a ten- year right to operate as an ABC retail establishment once it started its operation; franchisees receive an ABC building and necessary equipment; franchisees receive initial training and certification as an ABC retail. The 1,000,000 is payable with a down payment of P500,000 on August 1, 2021 with the balance will be payable in five equal annual payments with an interest of 10% starting January 1, 2022. The stand-alone selling price of the initial training and certification is P100,000 and P400,000 for the building and equipment. ABC estimates that the stand-alone selling price of the ten-year right to operate as a franchise using the residual approach. ABC received P500,000 on August 1, 2021 from DDD, which represent the collection from the training, building and…
Dominador's Pizza Inc. enters into a franchise agreement on December 31, 20x7 giving Doming Corp. the right to operate as a franchisee of Dominador's Pizza for 5 years. Dominador's charges Doming an initial franchise fee of P475,000 for the right to operate as a franchisee. Of this amount, P190,000 is payable when Doming Corp. signs the agreement, and the balance is payable in five annual payments of P57,000 each on December 31 Consider the following for allocation of the transaction price at December 31, 20x7. Rights to the trade name, market area, technical and proprietary know-how……………………………….…......P190,000.00 Services-training, etc………………………………………...94,591.50 Machinery and equipment, etc. (costing, P95,000)……..133,000.00 Total transaction price…………………………………….. P417,591.50 The credit rating of Doming indicates that money can be borrowed at 8%. The present value of an ordinary annuity of five annual receipts of P57,000 each discounted at 8% is P227,591.50. The discount of…
BANGBANG operates and franchises restaurants around the world. As part of its franchise agreement, BANGBANG requires a franchisee to pay a non-refundable upfront franchise fee of P9,500,000 upon opening a restaurant and ongoing payments of royalties, based on percentage of sales. As part of the franchise agreement, BANGBANG provides pre-opening services, including supply and installation of cooking equipment and cash register, valued at P2,500,000 (.e., the stand-alone selling price of the pre-operating services). In addition, the franchise agreement includes a license of intellectual property (1.e., BIGBANG's trademark and trade name) to the franchisee. Assume that BANGBANG has determined that the license provides a right to access the intellectual property. BANGBANG has determined the stand-alone selling price of the license is P7,500,000. The franchise agreement has a term of 15 years. BANGBANG evaluates the arrangement and determines it meets the criteria to be accounted for as a…
Collins, Inc., entered into a 10-year franchise agreement with an individual. For an initial franchise fee of$40,000, Collins agrees to assist in design and construction of the franchise location and in all other necessarystart-up activities. Also, in exchange for advertising and promotional services, the franchisee agrees to pay continuing franchise fees equal to 5% of revenue generated by the franchise. When should Collins recognize revenuefor the initial and continuing franchise fees?