Liezl Sangalang Malalaban, Inc. charges an initial franchise fee of P90,000 broken down as follows. Rights to trade name, market area, and proprietary know-how . . . . . . . . . P40,000 Training services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,500 Equipment (cost of P10,800) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,500 Total initial franchise fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P90,000 Upon signing of the agreement, a payment of P40,000 is due. Thereafter, two annual payments of P30,000 are required. The credit rating of the franchisee is such that it would have to pay interest of 8% to borrow money. The franchise agreement is signed on August 1, 20x8, and the franchise commences operation on November 1, 20x8. Assume that the total training fees includes training services for the period leading up to the franchise opening (P5,500 value) and for 3 months following opening. The journal entry on August 1, 20x8 would include: A credit to Unearned Service Revenue for P11,500 A credit to Unearned Service Revenue for P6,000 A debit to Sales Revenue for P38,500 A debit to Unearned Franchise Revenue for P40,000
Liezl Sangalang Malalaban, Inc. charges an initial franchise fee of P90,000 broken down as follows.
Rights to trade name, market area, and proprietary know-how . . . . . . . . . P40,000
Training services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,500
Equipment (cost of P10,800) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,500
Total initial franchise fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . P90,000
Upon signing of the agreement, a payment of P40,000 is due. Thereafter, two annual payments of
P30,000 are required. The credit rating of the franchisee is such that it would have to pay interest of
8% to borrow money. The franchise agreement is signed on August 1, 20x8, and the franchise
commences operation on November 1, 20x8. Assume that the total training fees includes training
services for the period leading up to the franchise opening (P5,500 value) and for 3 months following
opening. The
A credit to Unearned Service Revenue for P11,500
A credit to Unearned Service Revenue for P6,000
A debit to Sales Revenue for P38,500
A debit to Unearned Franchise Revenue for P40,000
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