On January 1, 2025, Maria Wilson signed an agreement, covering 5 years, to operate as a franchisee of Sheridan Inc. for an initial franchise fee of $40,000. The amount of $13,000 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. Maria Wilson's credit rating indicates that she can borrow money at 8% for a loan of this type. Click here to view the factor table. (a) Prepare journal entries for Sheridan 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.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January 1, 2025, Maria Wilson signed an agreement, covering 5 years, to operate as a franchisee of Sheridan Inc. for an initial
franchise fee of $40,000. The amount of $13,000 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. Maria Wilson's credit rating
indicates that she can borrow money at 8% for a loan of this type.
Click here to view the factor table.
(a)
Prepare journal entries for Sheridan 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
Jan. 1, 2025
Cash
Notes Receivable
Discount on Notes Receivable
Unearned Franchise Revenue
Jan. 1, 2025
Unearned Franchise Revenue
Franchise Revenue
Dec. 31, 2025
Discount on Notes Receivable
Textbookar H Media
Interest Revenue
13000
27000
Transcribed Image Text:On January 1, 2025, Maria Wilson signed an agreement, covering 5 years, to operate as a franchisee of Sheridan Inc. for an initial franchise fee of $40,000. The amount of $13,000 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. Maria Wilson's credit rating indicates that she can borrow money at 8% for a loan of this type. Click here to view the factor table. (a) Prepare journal entries for Sheridan 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 Jan. 1, 2025 Cash Notes Receivable Discount on Notes Receivable Unearned Franchise Revenue Jan. 1, 2025 Unearned Franchise Revenue Franchise Revenue Dec. 31, 2025 Discount on Notes Receivable Textbookar H Media Interest Revenue 13000 27000
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