On January 1, 2025, Debra Smith signed an agreement, covering 5 years, to operate as a franchisee of Cullumber Inc. for an initial franchise fee of $36,000. The amount of $9,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $5,400 each, beginning January 1, 2026. The agreement provides that the down payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2025. Debra Smith's credit rating indicates that she can borrow money at 9% for a loan of this type. Click here to view the factor table. (a) Prepare journal entries for Cullumber for 2025-related revenue for this franchise arrangement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.g. 58,971. List all debit entries before credit entries.)
On January 1, 2025, Debra Smith signed an agreement, covering 5 years, to operate as a franchisee of Cullumber Inc. for an initial franchise fee of $36,000. The amount of $9,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $5,400 each, beginning January 1, 2026. The agreement provides that the down payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2025. Debra Smith's credit rating indicates that she can borrow money at 9% for a loan of this type. Click here to view the factor table. (a) Prepare journal entries for Cullumber for 2025-related revenue for this franchise arrangement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal places e.g. 58,971. List all debit entries before credit entries.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2025, Debra Smith signed an agreement, covering 5 years, to operate as a franchisee of Cullumber Inc. for an initial
franchise fee of $36,000. The amount of $9,000 was paid when the agreement was signed, and the balance is payable in five annual
payments of $5,400 each, beginning January 1, 2026. The agreement provides that the down payment is nonrefundable and that no
future services are required of the franchisor once the franchise commences operations on April 1, 2025. Debra Smith's credit rating
indicates that she can borrow money at 9% for a loan of this type.
Click here to view the factor table.
(a)
Prepare journal entries for Cullumber for 2025-related revenue for this franchise arrangement. (Credit account titles are
automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles
and enter O for the amounts. Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to O decimal
places e.g. 58,971. List all debit entries before credit entries.)
Date
Account Titles and Explanation
Debit
Credit
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