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
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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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
d. P100,000
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
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.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education