JG Company granted a franchise to Jenny. Jenny was to pay P100,000 initial franchise fee payable in five equal annual installments starting with the payment upon signing of the agreement. The franchisee was to pay monthly 1% of gross sales of the preceding month. Should the operation of the outlet prove to be unprofitable, the franchise may be cancelled with whatever obligation owing JG in connection with the 100,000 franchise fee, waived.   The first year of operations generated a gross sales of 500,000. For the first year, JG Company earned a franchise fee of:   a. P160,000 b. P25,000 c. P80,000 d. P100,000

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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JG Company granted a franchise to Jenny. Jenny was to pay P100,000 initial franchise fee payable in five equal
annual installments starting with the payment upon signing of the agreement. The franchisee was to pay
monthly 1% of gross sales of the preceding month. Should the operation of the outlet prove to be
unprofitable, the franchise may be cancelled with whatever obligation owing JG in connection with the
100,000 franchise fee, waived.
 
The first year of operations generated a gross sales of 500,000. For the first year, JG Company earned a franchise fee of:
 
a. P160,000
b. P25,000
c. P80,000
d. P100,000

 

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